Hanging Man Candlestick on a Live Gold Chart

What it shows

Each hanging man gets a red label marked HM over the candle’s high.

How Pravex works it out

1. What counts as long or small for the hanging man moves with the market, since the yardstick is a 14-candle exponential average of body sizes, where a body is the distance from open to close, so a quiet stretch lowers it and a busy one raises it.
2. The shape is one candle with a small body (below the average) that is not a doji. In the hanging man, a doji body is at most 5% of the candle’s range (high minus low), on a candle whose range is above zero.
3. The lower shadow must be at least 2 times the body, and the upper shadow no more than 10% of the candle’s range. Either body colour counts.
4. For the hanging man, the trend test runs on the hanging man candle itself, which by default has to close above its 50-candle simple moving average to count as an uptrend; on the first 49 candles, where the average can’t be measured yet, nothing is marked.
5. This is the same shape test as the hammer. The only difference in our code is the trend before it: up for a hanging man, down for a hammer.

Settings

Setting	Default	What changing it does
Trend check	SMA50	Decides what counts as an uptrend before the hanging man. By default one close is read against the 50-candle average; adding the 200-candle average asks for a longer trend before the hanging man, and switching the check off ignores the trend completely.
Label colour	Red (#F23645)	Colours the HM label that sits over the high of the candle completing the hanging man, with the HM letters always in white.

How traders read it

The candle closed near its high, so at first glance it looks strong. The warning is in the shadow. During that candle sellers pushed the price far under the open, and that much selling inside a rising market is the first crack the pattern points at.

A hanging man is weaker than its bullish twin and asks for more proof. The usual check is the next candle: a close under the hanging man’s body, or better under its low, is what turns the warning into a sell case. A close above its high cancels it, and the rise carries on.

If you act on it, the high of the hanging man is the level that proves you wrong. Compare the candle with its neighbours before reading too much into it: a long wick on an unusually wide candle often comes from one news release.

When it misleads

Rising markets print plenty of long lower shadows that lead nowhere: a dip gets bought and the trend goes on. A close above the 50-candle average is all our trend test asks for, so a hanging man can be marked after a short bounce inside a fall. Read it as a question about the rise, and let the next candles answer. Wait for the close before trusting a hanging man label on the latest candle, which is checked on each update and can lose its label.

Questions and answers

Is a hanging man bullish or bearish?

Bearish. It appears after a rise and warns that sellers have started to push back. On its own it is a weak warning; the next candle closing lower is what gives it weight.

How is a hanging man different from a hammer?

The candle is the same. Pravex calls it a hanging man after a rise and a hammer after a fall, measured against the 50-candle average by default.

What confirms a hanging man?

A close below the hanging man’s body on the next candle is the usual check, and a close under its low is a stronger one. A close above its high means the warning failed.

Does a hanging man need a red body?

No. Our rules accept both colours. A falling body shows the close ended below the open, which some read as a little more bearish, but the long lower shadow after a rise defines the pattern.

Related: Hammer - Bullish, Shooting Star - Bearish, Engulfing - Bearish, All Candlestick Patterns, every indicator.