Candlestick
Hanging Man Pattern
Bearish
Reversal - Potential Sell Signal
The
Hammer and Hangman
patterns are part of a larger group of candlestick patterns
called the Umbrella Lines. The Umbrella line candles
include the Inverted Hammer,
the Hammer, the Shooting
Star and the Hangman.
This pattern group can form in either color (black or
white). This pattern group is one of the only pattern
types that is irrelevant of candle color. The other
pattern types that shares these conditions are the Doji
pattern group and the Doji Star pattern group.
The
Hammer and Hangman
patterns are the exact same candle formation. What makes
this type of candle an Hammer is when this candle forms
after a market down trend. Then it is said that the
market is attempting to hammer out a bottom (like the
Japanese did to create their copper woks). Confirmation
of the Hammer pattern will generate a buy signal.
When
this type of candle is found after an up trend, it is
considered a Hangman because of it resemblance of a
man that has been hung from a rope. Confirmation of
the Hangman pattern will generate a sell signal.
Notice:
Investors should continually watch for Dojis and the
Umbrella group of candles. These candle types will typically
precede a major market reversal. In fact, many investors
have told me these types of candles are some of the
most important candle types for investors to use.
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