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Hanging Man Pattern

The Hanging Man pattern is a candlestick formation that indicates a potential reversal of an uptrend. It consists of a small real body near the top of the candle with a long lower shadow that is at least twice the length of the body. It forms after an uptrend and signals that buyers are hesitating as sellers have pushed the price down significantly during the day. The next day's candle, which should be red and close below the Hanging Man, confirms if the reversal will occur. Examples are shown and guidelines provided on timeframe and risk/reward ratio for potential trades based on this pattern.

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Krishnadeep Khakhria
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395 views6 pages

Hanging Man Pattern

The Hanging Man pattern is a candlestick formation that indicates a potential reversal of an uptrend. It consists of a small real body near the top of the candle with a long lower shadow that is at least twice the length of the body. It forms after an uptrend and signals that buyers are hesitating as sellers have pushed the price down significantly during the day. The next day's candle, which should be red and close below the Hanging Man, confirms if the reversal will occur. Examples are shown and guidelines provided on timeframe and risk/reward ratio for potential trades based on this pattern.

Uploaded by

Krishnadeep Khakhria
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Download as PDF, TXT or read online on Scribd
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Hanging Man

Pattern Type: TOP Reversal


Formation:
A. Real body near the top of the candle.
B. Color not important, it can be green it can be red but Red shows you starting
of a bearish trend.
C. Lower shadow should be 2-3 times of real body, Max 3 times only and min 2
times.
D. Very Little or no upper shadow.
E. The previous trend should be up (bullish).
F. Hanging man forms in Uptrend and Near Resistance Line.

Confirmation :
1. Next Immediate candle should be red and have to close below Hanging Man.
always go with this confirmation. ( this is mandatory).
2. Focus on volume breakout of Hanging Man candle only( above 20 MA
volume) this will give you confirmation of the trades, Take Volume
confirmation as the last step before that, check all rules.

Conditions :
1. First, try to join Resistance line, and near about Resistance, you will get the
formation of hanging Man.

The Hanging Man candlestick formation, as one could predict from the name, is
viewed as a bearish sign. This pattern occurs mainly at the top of uptrends and
can act as a warning of a potential reversal downward. It is important to
emphasize that the Hanging Man pattern is a warning of potential price change,
not a signal, in and of itself, to go short.
There is a long lower shadow, which should be at least twice the length of
the real body.
After a long uptrend, the formation of a Hanging Man is bearish because prices
hesitated by dropping significantly during the day. Granted, buyers came back
into the stock, future, or currency and pushed price back near the open, but the
fact that prices were able to fall significantly shows that bears are testing the
resolve of the bulls. What happens on the next day after the Hanging Man
pattern is what gives traders an idea as to whether or not prices will go higher or
lower.

The chart above illustrates a Hanging Man, and the large red bearish candle
after the Hanging Man strengthens the bears thinking that a downward reversal
is coming:
In the chart above, the market began the day testing to find where demand
would enter the market. stock price eventually found support at the low of the
day. The bears' excursion downward was halted and prices ended the day
slightly above the close.
Information By: CityInvest Divish S.
Website : ​https://www.cityinvestwisely.com
Facebook : ​www.facebook.com/cityinvestmentservices
Telegram stocks: ​https://t.me/cityinvest
Telegram FNO: ​https://t.me/cityfno
Some Examples :

Information By: CityInvest Divish S.


Website : ​https://www.cityinvestwisely.com
Facebook : ​www.facebook.com/cityinvestmentservices
Telegram stocks: ​https://t.me/cityinvest
Telegram FNO: ​https://t.me/cityfno
Information By: CityInvest Divish S.
Website : ​https://www.cityinvestwisely.com
Facebook : ​www.facebook.com/cityinvestmentservices
Telegram stocks: ​https://t.me/cityinvest
Telegram FNO: ​https://t.me/cityfno
How to take Trade

Target Time Frame:


The timeframe for a target in all candlesticks reversals Thumb rule: It will
achieve a target in next 4-8 candlesticks, maybe 12-15 also, but if something
going beyond 15 then focus on the chart again or You have to Exit the trade,
But first check the Chart if there is no trend then better to exit. 80% of times
it will hit the target in 4-8 Candlesticks.
Risk/Reward Ratio:
First go with 1:1 ratio ( risk /reward)
If your stop loss is Rs 5 then your target will be Rs 5 only that means 1:1

First focus on 1 Day and 1 Hour candle time frame only.


Buying will be in last 10-15 minutes as per 1 Day candle
Buying will be in last 3-5 minutes as per 1 Hour Candle

Information By: CityInvest Divish S.


Website : ​https://www.cityinvestwisely.com
Facebook : ​www.facebook.com/cityinvestmentservices
Telegram stocks: https://t.me/cityinvest
Telegram FNO: https://t.me/cityfno

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