The candlestick hanging man and hammer patterns are reversal patterns consisting of the same candlestick form. Both of these patterns are often referred to as umbrella poles because of their shape. Also both of these patterns (hanging man and hammer) have the same shape although one indicates bearish and the other indicates bullish.
One that distinguishes both is the trending nature that appears. If the umbrella pattern that emerges during the uptrend is referred to as the hanging man pattern and if it appears as the downtrend then this is called the hammer pattern. Both of these patterns are single candlesticks which consist of a candle with a real body that is on top with a small shadow or no shadow on it and has a relatively long bottom shadow. Long shadow bottom at least twice the length of real body candle. The candle color of the hanging man and hammer patterns is not too important.
Hanging Man Pattern
The hanging man pattern is a bearish signal that appears as the uptrend indicates a potential reversal. This candlestick pattern is called the hanging man because this candlestick shape resembles someone hanging with the legs hanging down. The long downward shadow of the candle hanging man pattern generally gives bullish signals, indicating demand from the pair or stocks forcing the price to go up from one third of the period’s range.
For that, you should look for reversal of reversal. At least, the candlestick after the appearance of the candle hanging man must be closed under the real body of the hanging man. Confirmation can also be obtained from other trend reversal pattern patterns such as engulfing pattern or piercing pattern. The candle color of the hanging man pattern itself is not very important because the nature of the confirmation of this pattern is more significant than the color candle hanging man.
The benefit of identifying hanging man patterns is that you can get ready for a reversal position with a possible stop placement not too far away. And if a true trend reversal occurs, you have the best position at the beginning of a trend reversal.