Forex Glossary

Hanging Man

 

A Hanging Man candlestick appears during an upward trend and signals a potential decline in pricing. The candle comprises a little real body, a little or no above shadow, and a long lower shadow. The candlestick indicates that interest in selling is beginning to rise. The candle that follows the hanging man must witness the asset’s price drop for the pattern to be valid.  The appearance of a hanging man candlestick can signal that the market is about to turn bearish. Usually, traders enter short trades or withdraw from long trades during or after the candle has been confirmed not before.

How to Identify a Hanging Man 

A bearish candlestick pattern known as a “hanging man” appears following a price increase. A few price bars moving higher overall should make up at least part of the advance, no matter how small or large.

The candle should have a long lower wick, the body of the candle should be small and near the top of the candle, and the upper and lower wicks should be of similar length.

The real body of the candle must be small, and its long lower shadow must be at least twice the size of the real body. Little to no upper shadow is visible.

The close of the candlestick needs to be close to the open for the real body to appear small, whether it is above or below the open.

The hanging man’s extended lower shadow indicates that sellers were able to have the upper hand during a portion of the trading session.

 

Related Terms

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