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The hanging man candlestick pattern is one of the most discussed candlestick patterns that got its name because of its structure. This candlestick pattern is very powerful but does not appear very often therefore, It is very important to use this pattern properly.
What is the Hanging man candlestick pattern?
It is a single candlestick pattern that signals an upcoming uptrend reversal. as this is a reversal pattern there must be something in prior to the support of the pattern. It is not necessary for the asset to be in an uptrend but there must be some uprise in the price for a strong signal. I personally, use support and resistance to understand the pattern’s strength. In the case of the hanging man pattern, It will be considered strong if it appears near the resistance level.
How to identify the Hanging man candlestick pattern on the Olymp trade
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As, you can see above the candle I marked in the box is the perfect example of a hanging man pattern. this pattern is very easy to identify you just need to look for a small body with a long shadow. the colour of the candle is irrelevant. the main job of this pattern is to signal the upcoming bearish reversal.
Hanging Man candlestick strategy: How to trade
As, I said above, the hanging man candlestick pattern is a very powerful pattern, however, if it appears after a strong up trend it will give you even better results. As you can see above, the pattern appears after a strong uptrend so, here we can open a long sell position.
Use the Resistance level to confirm the trend
As, I said above this pattern will be considered even more stronger if it appears after an uptrend or near the resistance level. as you can see above the pattern appears after a strong uptrend and a resistance level so here we can place a long sell trade.
So, this is how you should trade with a hanging man candlestick pattern. I hope you have found this article helpful. the best you can do is try this try identifying this pattern on the Olymp trade demo account and once you are confident enough you can shift to the Olymp trade real account. this pattern is very powerful and can give you some serious results just remember to use support and resistance for confirmation.