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

Hammer Bullish Candle Setups

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

The reversal candle stick patterns are:

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

Hammer Candle Pattern & Hanging Man Candle Setup

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

Hammer Candle Pattern and Hanging Man Candlestick Setup

Hammer Candlestick

Hammer is a potentially bullish pattern setup which occurs during a downwards trend. It's named so because the market is hammering out a market bottoms.

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 color of the body isn't important

Hammer Candle

Analysis of Hammer Candle-sticks Pattern

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

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

Hanging Man Candlestick

This stocks pattern is a potentially bearish reversal stocks signal which occurs during a upwards trend. It's 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 two or three times length of the real body.
• Has no upper shadow or very small upper shadow if present.
• The color of the body isn't important

Hanging Man Candle

Analysis of Hanging Man Candles

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

Stop orders should be placed a few pips just above the high of the hanging man candle.