Hanging Man Candlestick

Hanging Man is a hammer candlestick that forms on a bullish market. It means hammer forms after some bearish candles and it is considered as a reversal signal on a bearish market, but hanging man forms after some bullish candles and it is considered as a reversal signal on a bullish market. In spite of this, hanging man and hammer candlesticks’ shapes are the same. It is better to learn about the hammer candlestick first and then read about the hanging man.

Hanging Man

Hanging man is a reversal candlestick, however like hammer it needs confirmation. You should not go short when you see a hanging man formed at the top of a bullish market. A confirmation candlestick has to be formed first. The confirmation candle has to be a bearish candle. The bigger the bearish body of the confirmation candle, the stronger the reversal signal. When the hanging man and its confirmation is formed, you can go short and place your stop loss above the open price of the hanging man. When you see the confirmation candle is not strong enough, you can simply ignore the signal and wait for another trade setup. Do not lose your money on weak signals.

Source : FxKeys.com