Why was a supposedly bullish candlestick not behaving like it is supposed to at that resistance level?

It was only until later that I knew about the hanging man candlestick. Thats when I began to understand the reasons behind why the hanging man candlestick forms in the kind of shape and form that it does. The hanging man candlestick pattern is a bearish reversal pattern found in an uptrend. As a matter of fact they are the same type of candlestick but what sets hanging man candlestick pattern apart is the fact that it forms in an uptrend and a hammer forms in a downtrend. What this means is that, If I see any hanging man candlestick on a chart I will completely ignore it if it forms in levels that hold no significance.

Hanging Man Candlestick Pattern (HOW TO TRADE TIPS TECHNIQUES)

Levels that hold significance are resistance levels, falling trend lines touches and Fibonacci retracement levels. The hanging man is a clear example of a potential reversal that may occur at the top of an uptrend. The hanging man is a bearish price formation that consists of a single candle with a small body and a long shadow. It sends a warning to the trader that an uptrend may be in its final stage and a reversal may take place soon.

When combined with other technical analysis tools, the hanging man can provide enough insights to place a sell trade.

This candlestick pattern is commonly used by traders to assess the market sentiment and generate trading signals. In this blog post, we will take a look at the structure of this pattern, how to spot it. Moreover, you will learn how to make profitable trades using it. Firstly, the candle should have its open O , high H , and close C prices roughly at the same price levels.

GBP/USD HANGING MAN CANDLESTICK

A long shadow should extend to the downside, being at least twice the length of the body. The longer the shadow, the higher the selling pressure is applied and the higher the chance of a reversal. The combination of these elements gives shape to a hanging man.

While the bulls or buyers have dominated price action, a large group of traders believe that the uptrend has peaked and it may be time for a correction or a pullback. Even though the price closed near the high, significant selling pressure was exerted, which resulted in a long wick lower, which indicates the growing presence of the bears in the game.

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As we will see below, it should be used in conjunction with other technical analysis tools before you place a short trade. It is quite easy to spot the hanging man candle. As outlined earlier, this formation should occur at the top of the uptrend; hence, you should be monitoring charts where the price action is moving higher. We can notice a slowdown in the uptrend as the pace of the new highs gets slower. At one point, the price action creates a marginal fresh high, then is a correction or a minor pullback. After that, we can notice a candle that has a close price almost at the same level as the open price.

Also, there is a long shadow below. In this example, we have a hanging man candle at the top of the uptrend. This scenario is ideal since the actual hanging man candle has made the highest price in the uptrend.

The Hanging Man is composed of only one candlestick, but it must be surrounded by candles that confirm its validity. The Hanging Man candlestick can be used to identify a short trade bearish view as the long shadow indicates selling pressure. The validity of the Hanging Man candlestick is confirmed by how price behaves after the candle is formed.

How to Trade Reversals with the Hanging Man Pattern

If the next candle falls below the low of the Hanging Man candle, this can be a good entry to go short. The Harami pattern consists of two candlesticks with the first candlestick being a large candlestick and A Hammer is a single Japanese candlestick pattern.

It is black or a white candlestick that consists of a The Bearish Engulfing pattern is a two-candlestick pattern that consists of an up white or green