Hanging Man

What are Hanging Man Candlesticks?

It is a reversal candlestick pattern with long lower shadow and no upper wick. It is a simple candlestick pattern made of a single candleline. They are bearish in nature and appear at the end of an upper trend.

It has its name because of its resemblance to the hanging dead man. It may also mean that if you do not respect this signal and still hold on to the position, then you are a dead man.


How Hanging Man Candles are formed?

A hanging man typically appear at the end of an up trend. They have a small real body at the upper end of the candle. The body may be black or white. They have a long lower wick which is double the height of the real body. The upper wick may be absent or very short.

It is formed because of the bears not allowing the bulls to push the price high. The stock is in  an up trend and at a crucial resistance level. After opening high the sellers push the prices down by over supplying the stock. It is accompanied by profit booking.

But later in that time period the buyers increase in number and the demand for the stock increases. The price moves up and closes near the opening, either just below or just above the opening price.

This results in a small body and a long lower shadow which looks like a hanging man.


Candle Charting for Technical Analysis in Stock Trading


What is the significance of Hanging Man Candlestick?

The market opens and continue their up trend. At the upper end of the trend the buying ceases. The trend reverses and the supply increases pulling the price lower. But the ongoing trend pushes the price again to close near the opening or little above.

The presence of resistance, lack of bullish white candle with a close above the resistance, presence of small body - all reflect the barricade of bears. There is bears short selling as well as bulls profit booking.

This should hint us the cessation of the up trend. Downtrend is likely to start. While every one is euphoric about the bull phase, you should feel cautious about the hidden bears not allowing the price to move decicively beyond the resistance area.

Next day's price movement confirms whether the trend is reversed or continuing. You should cover your long position and may plan to short the stock.

Hangingman candle with a black body is more bearish than the one with a white body.


Candlesticks with similar features, when they appear at the end of a down trend are called as Hammer candlesticks which are bullish in nature. So the name changes depending on, whether they appear at the end of an up trend or a down trend.

Read it by clicking the link below. 


Related Readings

There are many more simple candlestick patterns used in stock analysis. Some of them are listed below. You may click on the name of each pattern listed below to learn and understand more about them.

  • White Candlestick
    White Candles are bullish lines in candlestick and candlevolume charts. They signify that the closing price is higher than opening price for that time period.
  • Black Candlestick
    Black Candles or black candlesticks are bearish lines in candlestick and candlevolume charts. They signify that the closing price is lower than opening price for that time period.
  • Long Lower Shadow
    Long lower shadow of a candlestick indicates that the bears are loosing power and bulls are gaining power in that time period.
  • Long Upper Shadow
    Long upper shadow of a candlestick indicates that the bulls are loosing power and bears are gaining power in that time period.
  • Hammer
    A Candlestick Hammer is a reversal candlestick pattern with long lower shadow and no upper wick. They are bullish in nature.
  • Spinning Top
    Spinning Top candlestick is a candlestick pattern with small real body. They represent the areas of uncertainty.
  • Doji
    Doji candlestick is a candlestick pattern with out a real body. They represent the areas of uncertainty.
  • Dragonfly Doji
    Dragonfly Doji candlestick is a candlestick pattern with out a real body and upper shadow. They represent the areas of uncertainty.
  • Gravestone Doji
    Gravestone Doji candlestick is a candlestick pattern with out a real body and lower shadow. They represent the areas of uncertainty.
  • Marubozu White
    Marubozu White candlestick is a white candlestick with out shadows. They represent strong bullish trend in the market.
  • Marubozu Black
    Marubozu Black candlestick is a black candlestick with out shadows. They represent strong bearish trend in the market.
  • Candlevolume
    These are hybrid created by combining the features of Equivolume charts and Candlestick charts. The effect of high volume is pictorially emphasized.


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