Hanging Man

Appearance: This is a two-candle pattern in an up-trend where the second candle has a small body and a large lower shadow and a small or no upper shadow and the body of the second candle gaps above that of the previous candle.

Criteria: There must be a current up-trend. The body of the second candle should gap above the previous body. If not, it should only penetrate the previous body slightly.

Effect: The Hanging Man means that the up-trend has fallen away during the time period of the candle, but has recovered towards the end though with little or no progress in the direction of the trend ­ the momentum not being maintained. It is a weak downturn signal.

Note: In candlestick descriptions, "white (green)" refers to an up-bar, and "black (red)" refers to a down-bar. Individual traders prefer different bar colors. For example, we personally trade with candles set to green for up and red for down. (TradeStation defaults their Candlesticks to this color convention.) Most related textbooks use white (or green, if color is used) for up and black (or red) for down.