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

Hammer Bullish Candle-stick Pattern Setups

Reversal candlestick setups occur after an extended prior trend. Hence, for a candlestick pattern setup to qualify as a reversal 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 Candles and Evening Star Candlesticks
  5. Engulfing Candles Patterns

Hammer Candle-stick Pattern and Hanging Man Candlestick

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

How Do I Interpret Hammer Candles Patterns Bullish or Bearish?

Hammer Candlestick Pattern & Hanging Man Candlestick Pattern

Hammer Candle

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

A hammer has:

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

How Do I Analyze Hammer Candles Patterns Bullish or Bearish?

Hammer Candlestick

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 setup is a potentially bearish reversal signal that occurs during a upward trend. It is 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
  • 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 Pattern Setups Explained - How to Analyze Hammer Candle-stick Pattern Technical Analysis

Hanging Man Candlestick

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.

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