Hanging Man Full Explanation + Downside Reversal Strategy

What is Hanging Man?

A hanging is a bearish reversal candle that appears at the high point of an uptrend. It has exactly the same shape as the hammerhead — a long lower tail, no upper tail, and a smaller body. But the appearance location is just the opposite.

Origin of name: Appearance of a hanging person with legs dangling. An ominous sign that the upward trend is on the verge of ‘hanging’.

Fall interpretation of hanging

Strong selling pressure during the day pushed the price down significantly, but eventually recovered to near the market price. This selling attempt portends a future decline in price.

Conditions for increasing reliability

Checklist:

• Appears near the high point after an upward trend
• The lower tail is more than twice the size of the body.
• Small body (strength increases if it is a negative stick)
• Next candle closes as a negative candle ← Required confirmation
• RSI 70 or higher
• Near resistance line or previous high point

Why hanging eumbong is stronger

Hanging Torso:

• Beekeeping: Eventually, the day ended on the rise → Pattern reliability was medium.
• Bad note: Closed lower on the same day → Pattern reliability is high

Hanging a black candle + Confirmation of a decline in the next candle = Strong bearish signal

Futures trading short strategy

Entry: Enter after hanging and the next bar is confirmed to be down. 
Stop loss: 0.3-0.5% above hanging high 
Target: Immediate support line

Note: 
- It is more powerful if the next bar starts with a gap down. 
- If trading volume is higher than average on the hanging day, confidence increases. 

Related guides

• Hammer candle (same shape, opposite signal) →
• Shooting Star (Similar rising high high falling signal) →
• Evening Star Pattern →
• Liquidation price calculator →