The hanging man candlestick is an important bearish reversal pattern in technical analysis that typically occurs at the end of an uptrend trend and in the resistance zone and is a sign that an uptrend is ending and a downtrend may be starting.

The key features of this pattern are as follows:

• This pattern is formed by a single candlestick
• The candlestick has a small body at the top
• The lower shadow is at least twice the size of the body
• There is no upper shadow or if exists, it’s too short

The concept of hanging man candlestick pattern:

The small real body of the candlestick indicates that the opening and closing prices are close together and it means that the bears may be gaining strength.

The lower shadow of the candle is long, which means that the price fell significantly during the session but buyers were able to push it back up but ultimately failed to sustain those gains.

The upper shadow is very short or non-existent, which shows that the sellers were not able to push the price down significantly.

In simple terms, the hanging man pattern is a signal that shows that sellers have started to enter the market and buyers have lost control, causing the price may be about to drop, and traders should be looking forward to entering long positions.

Caution

It’s important to note that this pattern is only a warning to change the downward trend, and if you see this pattern in an upward trend, look for confirmation with the next candle, and take action according to other technical analyzes, the general market trend, volume or support and resistance levels.