Hanging Man Pattern: Spot Bearish Reversals at Market Tops
What Is It: Single-candle bearish reversal appearing at uptrend peak. Small body at top, long lower shadow (2x body length), signaling seller dominance.
Pattern Psychology: Bulls lose control as sellers push price sharply down during the session. Slight recovery by close shows weakness, not strength.
Hammer vs Hanging Man: Identical structure, opposite contexts. Hammer at downtrend bottom signals bullish reversal; Hanging Man at uptrend top warns bearish reversal.
Trading Strategy: Wait for next candle to close below Hanging Man body for confirmation. Place stop-loss above pattern's high point.
Boost Reliability High volume strengthens signal significantly. Combine with RSI divergence or resistance levels for 70%+ accuracy before entering short positions.