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

Hammer Bullish Candle-stick Setup Patterns

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

These reversal candlestick setups are:

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

Hammer Candlestick Pattern & Hanging Man Candlestick Pattern

Hammer Candle Pattern & Hanging Man Candlestick Pattern candle-sticks 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 setup which occurs 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 length of the real body.
• Has no upper shadow or very small upper shadow if present.
• The colour of the body isn't important

Hammer Candlestick

Technical Analysis of Hammer Candlesticks Pattern

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

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

Hanging Man Candlestick

This pattern is a potentially bearish reversal signal that forms during a upward trend. It's named so because it looks like a man hanging on a noose up high.

A hanging man candle-stick 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 colour of the body is not important

Hanging Man Candlestick

Technical Analysis of Hanging Man XAUUSD Candlesticks

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

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