Candlestick indicators "Hanging Man" and "Hammer"

Now I read a lot of literature, develop my thinking and learn a lot of new things. I would like to share with you useful information about the Hanging Man and Hammer candlestick indicators.

Hanging Man

The Hanging Man is a bearish reversal pattern that appears at the top of an uptrend. Its formation indicates a possible change in price direction from upward to downward.

- Appearance: A candlestick with a small body at the top of the range and a long lower shadow. The upper shadow is either absent or very short.

- Place of occurrence: Top of an uptrend.

- Meaning: A long lower shadow indicates that sellers took control during the trading session, although buyers were able to push the price back up. This signals possible weakness in the uptrend.

How to use:

1. Make sure the Hanging Man appears at the top of an uptrend. The pattern should confirm the existing trend.

2. Wait for confirmation in the form of the next candle. It is desirable that the next candle closes below the Hanged Man's body.

3. Use this signal to close long positions or open short ones if you are sure of a reversal.

Hammer

A hammer is a bullish reversal pattern that appears at the bottom of a downtrend. It indicates a possible change in price direction from downward to upward.

- Appearance: A candlestick with a small body at the top of the range and a long lower shadow. The upper shadow is absent or very short.

- Place of occurrence: Bottom of a downtrend.

- Meaning: A long lower shadow indicates that sellers controlled the market during the trading session, but buyers were able to return the price to a high level. This signals possible weakness in the downtrend.

How to use:

1. Make sure the Hammer appears at the bottom of a downtrend. The pattern should confirm the existing trend.

2. Wait for confirmation in the form of the next candle. It is desirable that the next candle closes above the Hammer body.

3. Use this signal to open long positions if you are sure of a trend reversal.

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