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

Hammer Bullish Candle-stick Setup Patterns

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

These reversal candlestick setups are:

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

Hammer Candle Pattern & Hanging Man Candlestick Pattern

Hammer Candle Pattern and Hanging Man Candle 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

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 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 buy signal is confirmed when a candlestick 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 candle.

Hanging Man Candle

This pattern is a potentially bearish market reversal signal that forms during a upwards trend. It's called and named so because it looks like a man hanging and dangling 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 real body.
• Has no upper shadow or has a very small upper shadow if present.
• The colour of the body isn't important

Hanging Man Candlestick

Trading Analysis of the Hanging Man XAUUSD Candles

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

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

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