Definition
Bearish Hanging Man consists of one candle and signals a trend reversal. It is very similar to the Bearish Dragonfly Doji, but here the opening and closing price is different. Bearish Hanging Man candle has a small body.
- Trend: Reversal
- Expected trend: Bearish
- Previous trend: Bullish
- Reliability: Low
- Type: Bearish
- Number: 1
Recognition
- The market is in an upward trend.
- The candle forms above the actual trend and has a small body. The colour of the candle is irrelevant.
- The lower shadow of the candle is at least two times longer than its body.
- There is no (or only a very short) upper shadow.
Interpretation
Bearish Hanging Man formation forecasts a trend reversal. The strength of the ascending trend decreases and the selling pressure increases. The lower shadow reflects the suppression of the prices. At the end of the day, the price increases and approaches the opening price. It is a warning signal for long position owners.
Important factors
Ideally, the lower shadow of the Bearish Hanging Man is at least two times longer than its body. This criterion is not always met. The longer the lower shadow, the higher the chance for a reversal. Bearish Hanging Man is less reliable than the Bearish Dragonfly Doji formation. If the Bearish Hanging Man is black, it means that the buyers could not push the prices above the opening price. The formation must be confirmed. It can come from a black candle with a downward gap or a lower closing price.
