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Abandoned Baby
Advance Block
Belt Hold
Breakaway
Dark Cloud Cover
Deliberation
Doji Star
Dragonfly Doji
Downside Gap Three Methods
Downside Tasuki Gap
Engulfing
Evening Doji Star
Evening Star
Falling Three Methods
Gravestone Doji
Hanging Man
Harami
Harami Cross
Identical Three Crows
In Neck
Kicking
Meeting Lines
On Neck
Separating Lines
Shooting Star
Side By Side White Lines
Three Black Crows
Three Inside Down
Three Line Strike
Three Outside Down
Thrusting
Tri Star
Two Crows
Upside Gap Two Crows

Hanging Man
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Pattern: reversal
Reliability: low/moderate

Identification
A small real body forms at the upper end of the trading range with a long lower shadow (the longer the more bearish) with no, or almost no upper shadow.

The Psychology
In an uptrend or within a bounce of a downtrend, a sharp intraday sell-off is followed by a reversal which causes the stock to close near its opening price near the day's high. Although the stock recovers from its intraday sell-off, it suggests the bulls are starting to lose strength, and a reversal may occur. The pattern is a slightly more reliable if the real body is black. A weak following day on solid volume is still needed to confirm the pattern.

The bearish Hanging Man is similar to the bullish Dragonfly Doji and bullish Hammer.



Bearish Hanging Man candles form very often so you need to use other indicators to confirm potential moves. Here BBBY formed a Hanging Man candle that was followed up by a bearish Engulfing stick. That's a good one-two combination to play.



After making a higher high DPH formed a bearish Hanging Man candle on strong volume and was followed a filled candle that confirmed the reversal of the uptrend.



Here is a bearish Hanging Man candle that would be best used to exit a long position rather than as a short entry. The stock is simply too strong to short unless you are a very slick short term trader.


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