Hanging Man Candlestick

The hanging man and the hammer are basically the same candlestick patterns. The main difference between the two is in the location where the pattern develops. The bullish version of the hammer appears at the bottom of a downtrend, whereas the hanging man, the bearish version of the hammer, appears at the top of an uptrend. When the hanging man appears at the top of an uptrend or after a series of green candles, and possibly in overbought conditions, this indicates that a reversal is about to occur. In this case the hammer pattern, known as hanging man, is a bearish reversal. However, further bearish confirmation is required. If the next day the price opens below the previous day close and the bears (the sellers) are taking the price down, this is the bearish confirmation that the reversal has occurred.