Technical Glossary / Candlestick Patterns
Hanging Man
A hammer-shaped candle after an advance. The long lower wick is a warning, not a buy.
Teaching sketch. It shows the shape, not a live quote and not a trade signal.
Definition
The geometry matches a hammer: small body near the high, long lower wick, after the market has been rising. The story changes because of location. A selloff inside the period, even if it was bought back, appeared where buyers had been comfortable.
How to identify it
An upswing, then a small real body at the top of the range and a lower shadow at least about twice the body. Do not use the bullish name.
Bullish reading
There is no bullish reading of a hanging man as a signal to add. If the next bar closes above the high, the warning failed and the uptrend is intact.
Bearish reading
The bearish case is a later close below the hanging man's body or low. That says the intrabar selloff was the start, not a dip that was saved.
Common mistakes
Buying it because it "looks like a hammer." The prior trend is the difference between the two names.
Limitations
Many hanging men are followed by new highs. It is a caution at an extended price, and a poor standalone short.
This note explains the term. A sketch shows the shape of the idea. Neither is a recommendation, a signal, or a comment on any security. Indicator settings and exchange conventions differ. Check the live chart and the contract specification before you use a number.