The Hanging Man Candlestick Pattern
The Hanging Man candlestick pattern is composed of a single candlestick and occurs during an uptrend. It is used by traders to identify the top of an uptrend.
In this article you will learn:
- What is a Hanging Man candlestick pattern
- How to identify and interpret a Hanging Man candlestick pattern
- Trading techniques after confirming a Hanging Man candlestick pattern
Our Latest Hanging Man Stock Alert
What is a Hanging Man candlestick pattern?
The Hanging Man is a candlestick pattern that is composed of a single candlestick. It occurs during an uptrend, and may indicate the top of the uptrend. The candlestick has a small body, long lower wick, and ideally no upper wick.
How to Identify a Hanging Man Candlestick Pattern
Because the Hanging Man pattern occurs in an uptrend, our suggestion is to look at the previous 3 trading periods to verify if the uptrend is confirmed. In addition, the body of the Hanging Man candlestick should be small. Ideally this should be less than the average body size of the past 20 trading periods. Lastly, the candlestick should have a long lower wick and little to no upper wick.
As can be seen in the chart above, the Hanging Man candlestick pattern occurred at the top of an uptrend. The next candlestick confirms the downtrend.
Trading Techniques for the Hanging Man Candlestick Pattern
It is recommended to wait one trading day to confirm the Hanging Man candlestick pattern. If the following day closes lower, this could mean a reversal in the stock and could indicate a potential bearish entry point.