Reversal Candlestick Setups and Their Confirmation: Hammer and Hanging Man Candle Setup - Bullish and Bearish Candlesticks

Hammer Bullish Candle Setups - Hanging Man Bearish Candlestick Setups

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

The reversal candle patterns are:

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

Hammer Candle Pattern and Hanging Man Candle Pattern Candles

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

Hammer Candle Pattern and Hanging Man Candle Pattern Candles

Hammer Candlestick

Hammer is a potentially bullish setup which occurs during a forex downtrend. It is 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 2 or 3 times the length of the real body.
• Has no upper shadow or very small upper shadow if present.
• The color of the body is not important

Hammer Candle

Technical Analysis of Hammer Candlestick Pattern

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

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

Hanging Man Candlestick

This pattern is a potentially bearish reversal signal which occurs during a forex uptrend. It is named so because it resembles a man hanging on a noose up high.

A hanging man candle has:

• A small body
• The body is at the top
• The lower shadow is 2 or 3 times the length of the real body.
• Has no upper shadow or very small upper shadow if present.
• The color of the body is not important

Hanging Man Candle

Technical Analysis of Hanging Man Candles Pattern

Sell signal is confirmed when a bearish candlestick closes below the open of the candle on left-side of this hanging man candle setup.

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