- Hanging Man is a single candlestick bearish reversal pattern. This appears after a sustained up-move.
- The candle looks like a hammer; only difference is that it appears at the end of an up-trend.
- The candle should have a small body at the top (red/green) and a lower shadow at least twice the length of the body. There should be very small or no upper shadow.
- A red colored body of hanging man pattern is more bearish than a hanging man pattern with green body. The confirmation of the pattern happens when price moves below the low of the candle.
- On confirmation a trader may take short trade with stop-loss above the high of the candle. The hanging man pattern is bearish counterpart of Bullish inverted hammer.
However this appears much less frequently than shooting star which is another bearish reversal pattern.