Hanging Man Candlestick Patterns - Complete guide [ A-Z ] - YouTube

hello traders and welcome back thank you for  joining us and in this training video we'll be  

going over the hanging man candlestick and  how to trade it how to use it in a trend  

reversal formation so this is what we're going  to cover we'll talk about what is the hanging  

man and why it's relevant to you in your trend  reversal setups the differences between a hammer  

and a hanging man the variations of the hanging  man and how it looks like and some examples of  

various setups so let's just talk about  the hanging man itself so the hanging man  

is only used for cell setups so we're only when  we're looking to short the market we have a trend  

forming and what we have at the top of the trend  is this formation and it's called a hanging man  

because it looks a little bit like a man that's  hanging with its arms and its head here so

what is actually going on in the hammer hanging  man candle what we have is that right at the top  

we have buying buying buying as we go up the trend  and then once we close in this candle here we have  

a lot of selling and the buyers attempt to overrun  that selling they don't quite close at the top  

but they attempt to overrun all that selling  pressure however because of this selling pressure  

that is an indication that more selling pressure  is to come so what the hanging man shows is that  

sellers are now starting to appear in the  market and selling pressure is increasing

so as opposed to the hammer which we find at  the bottom of a trend like so we spoke about  

in another video we have selling pressure  and then the buyers overwhelm the whole  

candle in this case we're talking about  selling and although it does look the same  

in this case what we have is you can see  the body of the candle is often at the best  

hanging man's is often above the previous  candle and also sometimes above the following  

candle and we can see in the following candle  that comes next we can see that indeed the

suspicion that the sellers are now in the market  is confirmed by this very strong selling pressure  

and this would be a confirmation of the  hanging man candle so what are the variations  

the variations are that in this case we have a  close above however the better hanging man would  

be let's say for example we draw the previous  candle again here the best hanging man would be

one where either the candle

lies right above the previous one and then  we have the next candle confirms or we have

previous candle and then we have the open and  the candle actually closes bearish it closes weak

so you pretend this is a black candle this is a  selling candle the price closes lower right here  

that is even better than this one  because in this case the price  

closed higher so the buying pressure was  strong and in this case when it closes weak  

then we can see that the selling pressure is  even more prevalent than it is in this case  

so sometimes the hanging man appears right next to  

the previous candle and then we have  another candle here that comes next

the selling candle will confirm it however  they do not always look the same they  

hardly ever look the same in fact because we  have all kinds of variations so one variation  

again is above or the candle sticks out the  hanging man sticks out and in this case the  

hanging man is kind of lying in between on  the same almost on the same level you can say

so that is the hanging man and how it looks  like so here we are on the chart and here's  

one example you can see very clearly we had a very  strong bullish trend and suddenly right at the top  

we have this hanging man here now again as with  all the other patterns we need to remember that  

we are going to use other confluences  we can use our zones we can use our fibs  

and we can use trend lines if you  like elliott waves or abcd patterns  

and we can see here on this level on the zone we  had the hanging man formation in the middle of a  

trend or if you see the hanging man somewhere at  a random area that is not a high probability setup

and here again on the same chart another example  

you can see very strong trend and suddenly  what do we notice we have a spinning top doji  

we have the hanging man formed on the same  level in this case it did not speak above

it did not come higher oops  higher than the previous candles  

however it is still a valid hanging man since it  is now at the top of the trend and we can see a  

slow down in momentum and a slowdown in price  action and we can see the next candle actually  

moved higher spiked above and we have this  confirmed selling pressure we can see the  

nick can next candle close lower and once  again we have another yet another candle  

and this is very clear that now we have selling  pressure and this is a this is the time to sell  

okay so let's just look at another couple  of variations here you can see once again  

a little earlier in the chart  the same picture the same type of  

price action very strong bullish momentum and then  suddenly in this case we have a bearish hanging  

man so here we could see that the price closed  lower and although the hanging man is not sticking  

out above the previous candle it is still hanging  men and we have that very strong confirmation  

after the hanging man so these three candles put  together will show us the reversal and as we can  

see the market sold off so let's just look at one  more example here we are once again in this case  

it's the dollar cad on the daily we have another  strong trend and all of a sudden we can see  

two candles in this case a spin in top and  we have the hanging man sticking out hasn't  

gone above the previous candle but it's a hanging  man and then we have a very bearish candle which  

closed very weak and we can  see that as a confirmation  

of the actual hanging man itself and if  we zoom out of course we would like to see  

some other confluences we would like to see  a reason for the market to reverse off here  

and we will see a level here we may  want to draw fibonacci once more time

and that will go back that will give us  the confirmation we can now place a cell  

and we can expect the market to sell off and  that is the hanging man so just to summarize  

it doesn't matter if it closes bullish or  bearish when we can see a clear hanging man  

with that large wick at the top of a trend with  other confluences as always you'd like to use  

other confluences other reasons to place the  trade because you do not want to just rely  

on the hanging man itself and that will  add you add to your setup more strength  

and increase the probability of it working out  and that was a bit about the hanging man candle

so thank you very much for watching  and uh if the hanging man candle forms  

at your expected cell entry with your other  confluences and confirmations look to enter  

with those confirmations on the chart and  remember this is a cell candle and used for  

shorting the market good luck  everyone and good trading