Reversal Candlestick Patterns and Their Confirmation: Hammer Candle Pattern and Hanging Man Candlestick Pattern
Hammer Bullish Candle-stick Setup Patterns
Reversal candlestick formations are only valid if they emerge following an established, prolonged market trend: thus, the prerequisite for any candlestick configuration to qualify as a reversal pattern is the existence of a preceding trend.
These reversal candlestick setups are:
- Hammer Candlestick Pattern Hanging Man Candlestick Pattern
- Inverted Hammer Candle Pattern and Shooting Star Candlestick Pattern
- Piercing Line Candlestick Pattern and Dark Cloud Cover Candle Pattern
- Morning Star Candle & Evening Star Candles
- Engulfing Candles Patterns
Hammer Candle Pattern & Hanging Man Candlestick Pattern
Hammer Candle Pattern and Hanging Man Candlestick Pattern candles look alike but hammer is a bullish market reversal pattern & hanging man is a bearish market reversal pattern.
Hammer Candlestick Pattern & Hanging Man Candlestick Pattern
Hammer Candle
A Hammer is a sign that the price might go up, and it happens when the price is going down. It's called that because the market is finding a bottom.
A hammer has:
- A small body
- The body is at the top
- The lower shadow is 2 or three times length of real body.
- Has no upper shadow or very small upper shadow if present.
- The colour of the body is not important
Hammer Candle
Technical Analysis of the Hammer Candles Pattern
The signal to buy is verified when a candlestick ends above the starting price of the candle to the left of the hammer pattern.
Stop orders should be set few pips just below the low of hammer candle.
Hanging Man Candle
This pattern might signal a market reversal to a downward trend, and it happens when prices are generally going up. It gets its name because it resembles a person hanging from a high noose.
A hanging man candle-stick has:
- A small body
- The body is at the top
- The lower shadow is 2 or three times length of real body.
- Has no upper shadow or has a very small upper shadow if present.
- The color of the body isn't important
Hanging Man Candlestick
Trading Analysis of the Hanging Man XAUUSD Candles
The sell signal is validated when a bearish candle closes beneath the opening of the candlestick to the left of the hanging man candlestick pattern setup.
Stop orders ought to be placed a few pips above the peak of the hanging man candlestick.
Learn More Topics and Lessons:
- XAU USD MT4 Platform Download Tutorial
- What's SPX 500 Spreads? SPX500 Index Spread
- Choosing the Right Analysis FX Strategy for Beginner Traders
- How Can You Trade US 500 Indices?
- Introduction to Softwares
