Courtesy of MarketTamer
- The hanging man is a single candlestick pattern found at the top of a bullish trend and indicates a reversal is imminent.
- The name comes from the visualization of a man hanging depicted by a head and dangling legs.
- The real body of the candle should be small and finish in the upper 1/3 to 1/4 of the day’s session.
- The wick or shadow should be a least twice the length of the real body.
- The candle should ideally have a "Shaven Head" with no shadow to the upside.
- The color of the real body is slightly more bearish if it is dark as opposed to white.
- The classic formation should occur with the Hanging Man gapping open to the upside on increased volume.
- A gap down and trade down candle the following day will confirm the reversal.
- At first glance, it may appear that the Hanging Man is a bullish candle because it closed higher than the previous day. However, the fact that it is apparent that sellers are present as represented by the long shadow will usually convince those that are long to close and take profit which is evidenced by a bearish follow though day in the next session.
Buying Opportunity OR The Beginning Of The End?
S&P 500
