Hammer and Hanging Man Candlestick Pattern Explained
🔍 Introduction
In technical analysis, single candlestick patterns are powerful tools to spot market reversals. Two important patterns in this category are the Hammer and the Hanging Man. Both have a similar shape but indicate different market sentiments depending on their position in the trend.
🔨 What is a Hammer Candlestick?
- Type: Bullish Reversal
- Appears in: Downtrend
- Structure: Small real body, long lower wick, little or no upper shadow
The Hammer shows that although sellers pushed prices lower during the session, buyers regained control by the close. This signals potential upward reversal.
✅ Hammer Confirmation
Always wait for the next candle to close above the hammer’s high for proper confirmation of reversal.
💀 What is a Hanging Man Candlestick?
- Type: Bearish Reversal
- Appears in: Uptrend
- Structure: Same shape as the Hammer
The Hanging Man shows that sellers are beginning to gain strength after an uptrend, possibly leading to a reversal or pullback.
⚠️ Hanging Man Confirmation
Wait for the next candle to close below the low of the Hanging Man for confirmation.
🖼️ Chart Example: Hammer & Hanging Man
Here’s a real example to understand the patterns visually:
Chart Explanation:
- Hammer: Appears after a downtrend and signals a possible bounce.
- Hanging Man: Appears after an uptrend and warns of a possible top.
📌 Key Takeaways
- Hammer and Hanging Man look similar but appear in opposite trends.
- Use with volume, support/resistance levels, and confirmation candles.
- Do not trade based on pattern alone — context matters.
📢 Final Words
The Hammer and Hanging Man patterns are easy to spot and helpful for making informed trading decisions. When combined with technical indicators, they become even more powerful tools in your stock market strategy.
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