Hammer and Hanging Man Candle Reversal Patterns

• Posted by kenpachi on January 26, 2009
• 1 comments

The Hammer and Hanging Man are two of the simplest candlestick patterns to learn, and well worth learning.

The Hammer

The Hammer pattern is a bottom reversal pattern and is often referred to as "Hammering out the bottom". This pattern can show up at any location, but is only valid after a downtrend, even if that downtrend is small. To find Hammers use the characteristics below:

• A long wick - at least twice the length of the real body
• A small real body (minus wick)
• Small or no upper wick
• Appears after a downtrend
• Bonus point if the hammer is a bullish candle

Confirming the Hammer

To confirm a Hammer, you should wait for the next candle. The next candle should be a bullish candle. If the next candle gaps up that is even a stronger signal that a bottom has been reached. If the candle is bearish then the downtrend is still in effect, so hold off.

Hanging Man

This is the inverse of the Hammer pattern. The Hanging Man is a top reversal pattern that forms at the end of an uptrend. For it to be valid it must occur directly after an uptrend. Below are the characteristics

• A long wick - at least twice the length of the real body
• A small real body (minus wicks)
• Small or no upper wick
• Appears after an uptrend
• Bonus point if the Hanging Man is a bearish candle

Confirming the Hanging Man

To confirm a Hanging Man, you should wait for the next candle. The next candle should be a bearish candle. If the next candle gaps down it is a stronger signal that a top has been reached. If the candle is bullish the uptrend is still in effect.

Example of Hammers and Hanging Man