Still a reversal pattern, the hanging man has the same shape as the hammer, with the difference that it comes after market advances. So it should be treated on a similar manner, with but this time looking for bearish confirmation within the hanging man, and such a confirmation would be for example a lower opening under the real body of it.
Remember, both hammers and hanging man have a long shadow (the tail of the candle) and a small body, so based on my experience a close beneath the hanging man would be more appropriate. Without such a close there is the possibility for this pattern, especially on the lower time frames like one hour and four hour charts, to be reversed by market.
The recording that comes with this chapter will show you examples of hanging man as a reversal pattern, going on different time frames, from the monthly chart until the one hour chart with the purpose of showing you that the higher the time frame, the powerful the pattern. I will also use zoom into the candles in order to show you what is a shadow, how the body will look like, how to find bearish confirmations, etc.
Hammers and hanging man are one of the most important reversal patterns under the candlestick charting techniques and, even though we’re talking about only one candle, their significance should not be overlooked, again, especially on higher time frames like monthly and weekly charts.