Hanging Man

Name Type Prerequisite Use Cases
Hanging Man Bearish Reversal OHLC Data Signaling a potential top.

Definition

The Hanging Man looks exactly like a Hammer but forms at the top of an uptrend. It has a small real body at the upper end of the trading range and a long lower shadow.

Pattern Structure

  • Context: Forms in an uptrend.
  • Lower Shadow: Long, at least 2x body.
  • Upper Shadow: Little to none.
  • Body: Small (green or red, though red is more bearish).

Visualization

Hanging Man

Story

Riding high on an uptrend, the market suddenly experiences a severe bout of vertigo. A massive wave of selling forces the price plummeting intra-day, creating deep panic. Although the bulls manage to claw their way back to close near the open, the psychological damage is done. The long lower wick reveals that a massive reservoir of selling pressure exists just below the surface, warning that the bull run is standing on a trapdoor.

Trading Significance

  1. Vulnerability: The long lower shadow shows that sellers were able to push the price down significantly during the session.
  2. Warning Sign: Even though it closed near the high, the selling pressure is a warning that bulls are losing control.