If the session closes above the opening price, forming a green hammer, the signal is even stronger. A hammer appearing at a key support level often signals that buyers are ready to take control.

What Is a Hanging Man Candlestick?

The hanging man looks identical to the hammer candlestick but forms during an uptrend. While some traders interpret it as a bearish reversal signal, it should be approached with caution.

Interpreting the Hanging Man

It tells us that, despite buyers pushing the price higher, sellers were able to drive it significantly lower before buyers regained control. This creates a long lower shadow.

Although it can suggest weakening bullish momentum, it’s not a strong enough reason to go short on its own. Instead, it’s better viewed as a warning signal. Be cautious with long positions and look for confirmation before entering a short.

Hammer Candlestick vs Hanging Man

Both patterns, Hammer Candlesticks and Hanging Man, require confirmation. Don’t trade them in isolation—combine them with support/resistance zones, trendlines, or indicators.

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