This candle is considered one of the strongest candles that appear at resistance levels, signaling a reversal from a downward wave to an upward one.
Dear reader, if you are a beginner, your eyes may need some time to get used to recognizing candlestick shapes. With consistent practice, you will be able to identify them easily. This candle consists of a body and a wick, where the wick is usually two to three times the size of the candle’s body.
This candle may not appear very frequently on the chart, but when it does, and it is followed by a confirmation candle that closes below the opening of the first candle, it becomes a very strong sell signal.
The color of the candle is not important, whether it is red or green, bullish or bearish. What matters most is the shape of the candle and the confirmation candle that follows it.
This candle is similar to the Hammer pattern, but the Hammer appears at support levels, while at resistance levels it is called the Hanging Man.
In this pattern, buyers try to push prices higher, but they fail due to the strength of the sellers. The confirmation candle that follows serves as confirmation of this pattern.
The red mark indicates the Hanging Man candle, and the white mark indicates the confirmation candle. As you can see, the confirmation candle closed below the opening of the first candle.
We enter a sell trade, placing the stop loss above the Hanging Man candle by twice the spread.
If this candle appears in an area other than resistance, it is not considered a Hanging Man and has no significance. If it appears at a support level, it is called the Hammer pattern.
Another example confirms how powerful this pattern can be when used correctly. The Hanging Man pattern appeared, followed by the confirmation candle, after which the price collapsed.
In the end, this candle is one of the easiest candlestick patterns that can generate profits if used correctly.
