Although Hanging Man and the Hammer candles appear to be pretty similar, the recent movement or short-term trend distinguishes these two candlesticks.
Introduction
Hanging Man and the Hammer candles looks quite similar but these two candlesticks are differentiated by the prior move or short term trend. Both candlesticks have long lower shadows and small bodies as the Hanging Man pattern is bearish and the Hammer pattern is relatively bullish in nature.
Hammer Candlestick Pattern
At the bottom of the trend, there is a significant candlestick pattern known as the bullish Hammer. A Hammer has a short genuine body at the top of the trading range and a long shadow in the lower third. The pattern is more bullish the longer the lower shadow is. The Hammer should have previously been on a downward trend.
The market is anticipated to trade lower and make a new low
the day the Hammer pattern appears. However, a little amount of purchasing
interest starts to emerge at the low point, driving prices up to the point
where the stock finishes close to the day's high.
The price movement on the day of the Hammer formation suggests that the bulls made an effort to prevent the prices from falling any further and were somewhat successful in doing so in order to close the prices on a high note.
Hanging Man Candlestick Pattern
The Hanging Man is a top reversal pattern and a single candlestick pattern. Only if it is preceded by an uptrend and appears after a high is it considered a Hanging Man and signals a market high. In essence, a bearish Hanging Man pattern signals increased selling pressure.
Higher highs and higher lows are formed when the market is on an uptrend and bulls are in charge. This pattern, however, indicates that the bears have made a comeback and are attempting to weaken the bulls' position and close at the lowest price.
Disclaimer: This is only for education purposes from Two Side Tutorial,
Read More : Beginner guide of Stock Market
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