Reversal Candlestick Setups & Their Confirmation: Hammer and Hanging Man Candle Setup - Bullish and Bearish Candles
Hammer Bullish Candle Setups - Hanging Man Bearish Candlestick Setups
Reversal candle patterns are only valid if they emerge following a significant, established trend in the market. Therefore, a prerequisite for any candle formation to qualify as a reversal pattern is the prior existence of a trend.
The reversal candle patterns are:
- Hammer Candle Pattern and Hanging Man Candle Trading Pattern
- Inverted Hammer Candlestick Pattern & Shooting Star Candlestick Pattern
- Piercing Line Candle Pattern & Dark Cloud Candlestick Pattern
- Morning Star Candlestick and Evening Star Candles
- Engulfing Candles Patterns
Hammer Candle Pattern and Hanging Man Candlestick Pattern Candlesticks
Hammer Candlestick Setup & Hanging Man Candle Setup candlesticks look similar but hammer is bullish reversal pattern and hanging man candlestick is a bearish reversal pattern.
Hammer Candle Pattern and Hanging Man Candle Pattern Candlesticks
Hammer Candle
A Hammer is a bullish setup that forms during a forex downtrend. They call it that because it looks like the market's hammering out a bottom.
A hammer has:
- A small body
- The body is at the top
- The lower shadow is 2 or three times the length of the real body.
- Has no upper shadow or has a very small upper shadow if present.
- The color of the body isn't important
Hammer Candle
Technical Analysis of Hammer Candle Pattern
The buy signal confirms when a candlestick closes above the open of the candle next to the hammer setup on the left.
Stop orders should be set a few pips just below low of the hammer candle.
Hanging Man Candle
This pattern formation is a potentially bearish reversal signal which occurs and forms during a forex uptrend. It is named & called so because it looks like a man hanging on a noose up high.
A hanging man candlestick has:
- A small body
- The body is at the top
- Lower shadow is 2 or 3 times 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
Analysis of the Hanging Man Candles Pattern
Sell signal gets 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.
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