Reversal Candle Patterns and Their Confirmation: Hammer Candle Pattern & Hanging Man Candlestick Pattern

Hammer Bullish Candlestick Patterns

Reversal candle patterns occur after an extended prior trend. Therefore, for a candle setup to qualify as a reversal energies setup there must be a prior trend.

The reversal candle patterns are:

1. Hammer Candle Pattern and Hanging Man Candle Pattern
2. Inverted Hammer Candlestick Pattern and Shooting Star Candle Pattern
3. Piercing Line Trading Candlestick Pattern and Dark Cloud Cover Candlestick Pattern
4. Morning Star Candlesticks & Evening Star Candlesticks
5. Engulfing Candles Patterns

Hammer Candle Setup and Hanging Man Candle Setup

Hammer Candle Setup & Hanging Man Candlestick Pattern look alike but hammer is bullish reversal pattern and hanging man is a bearish reversal pattern.

Hammer Candle Pattern and Hanging Man Candlestick Pattern

Hammer Candlestick

Hammer is a potentially bullish pattern which occurs during a downwards trend. It is named so because the market is hammering out a market bottoms.

A hammer has:

• A small body
• The body is at the top
• The lower shadow is two or three times length of the real body.
• Has no upper shadow or very small upper shadow if present.
• The color of the body isn't important

Hammer Candlestick

Technical Analysis of Hammer Candles Setup

The buy signal is confirmed when a candlestick closes above the opening price of the candle-stick on the left side of the hammer candle setup.

Stop orders should be set few pips just below the low of the hammer candle.

Hanging Man Candlestick

This pattern is a potentially bearish reversal signal which forms during a upward trend. It is named so because it resembles a man hanging on a noose up high.

A hanging man candle has:

• A small body
• The body is at the top
• The lower shadow is two or three times length of the real body.
• Has no upper shadow or very small upper shadow if present.
• The color of the body isn't important

Hanging Man Candle

Technical Analysis of Hanging Man Candles

Sell trading signal is confirmed when a bearish candlestick closes below the open of the candlestick on the left side of this hanging man candle setup.

Stop orders should be set a few pips just above the high of the hanging man candlestick.