Reversal Candle Pattern Setups and Their Confirmation: Hammer Candle-stick Pattern and Hanging Man Candle Pattern

Hammer Bullish Candle-stick Pattern Setups

Reversal candle setups occur after an extended prior trend. Hence, for a candle pattern to qualify as a reversal pattern setup there must be a prior trend.

The reversal candle setups are:

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

Hammer Candle-stick Pattern and Hanging Man Candlestick

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

Hammer Candlestick Pattern & Hanging Man Candlestick Pattern

Hammer Candlestick

Hammer is a potentially bullish pattern which forms during a downward trend. It's named so because the market is hammering ++oout a bottom.

A hammer has:

• A small body
• The body is at the top
• The lower shadow is 2 or 3 times length of real body.
• Has no upper shadow or very small upper shadow if present.
• The colour of the body isn't important

Hammer Candle

Analysis of Hammer Candlesticks Pattern

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

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

Hanging Man Candlestick

This pattern is a potentially bearish reversal signal that occurs during a upward trend. It's named so because it looks like 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 2 or 3 times length of real body.
• Has no upper shadow or very small upper shadow if present.
• The colour of the body isn't important

Hanging Man Candle

Analysis of Hanging Man Trading Candlesticks

The sell signal is confirmed when a bearish candlestick closes below the open of the candle on left-side of this hanging man candle pattern setup.

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