Bearish Hanging Man
The pattern occurs at the top of a trend or during an uptrend. The name Hanging Man comes from the fact that the candlestick looks somewhat like a hanging man.
It is a single candlestick pattern that has a long lower shadow and a small body at or very near the top of its daily trading range.
How to identify
- Small real body at the upper trading range.
- Color of the body is not important.
- Long lower shadow at least twice the length of the body.
- Little or no upper shadow.
- Previous trend should be bullish.
As with any single candlestick, confirmation is required. The Hanging Man pattern shows the price goes much lower than the open then closes near the opening price.
This could mean that many longs have positions that they are attempting to sell. Ideally, a red real body Hanging Man with a lower open the following day could be a bearish signal for the days ahead.