The Hanging Man is a bearish pattern with a long lower shadow, little or no upper shadow, and a small body forming near the bar high. This may indicate that buyers have lost their strength and an impending bearish reversal.
What is the Hanging Man
The Hanging Man pattern indicates significant selling during an up-trend. Although buyers managed to drive prices to close near the open, the intra-bar selloff may indicate that prices have peaked. The pattern can therefore provide an opportunity to close a long position, alternatively, consider a short setup.
Typically, the candle range for the Hanging Man pattern is above average with a large lower shadow. The lower shadow is x times larger than the body size than the upper shadow. As for determining the current bias, the candlestick indicator comes with an internal Swing Trend indicator. Deviation type, calculation period and deviation threshold is set via the indicator dialogue box. Likewise, the small-body requirement is also user selectable. Finally, the prior candle to the Hanging Man pattern was an up-close or a small body bar. The bullish equivalent to this patter in the Bullish Hammer.
Other bearish candlestick patterns
Other bearish candlestick patterns include the bearish belthold, bearish engulfing, bearish harami, bearish harami cross, black marubozu, dark cloud cover, shooting star, gravestone doji, evening star, evening doji star, long black candle, tweezers top, three black crows and the falling three methods.
TheHanging Man and the above patterns may be identified with our candlestick pattern indicator for NinjaTrader 8. Check out the LizardIndicators Premium Section for more information.
