Hanging Man

The Hanging Man is a bearish signal indicating that the prior uptrend is about to end and may reverse to a downtrend or move sideways. The name Hanging Man is used because it has a gloomy connotation, and also because the candlestick that defines this pattern looks like a Hanging Man with dangling legs. The Hanging Man pattern is characterized by a small Real Body near the top of the price range. The Real Body can be black or white, although a black candlestick is preferable. A black candlestick is slightly more bearish since it shows that the close could not get back up to the opening price level. The Hanging Man has a long lower shadow that should be at least twice the length of the Real Body. The upper shadow should be very small or non-existant.

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