Hanging Man Candle: A Warning Signal at the Top of an Uptrend
In the trading world, it's not enough to just chase prices — you must also observe behavior! This is where the importance of the Hanging Man candle comes in, one of the most famous Japanese candlesticks that signals a potential reversal of an uptrend and warns of a possible upcoming decline.
General shape of the candle:
Small body (top of the candle).
Long lower shadow (at least twice the length of the body).
Very short or nonexistent upper shadow.
Often appears after a series of bullish candles.
What does it mean?
The Hanging Man candle indicates that buyers are still trying to push the price higher, but sellers have started to appear strongly during the session, increasing the likelihood of a trend reversal.
Is it enough to enter a sell trade?
No. Like most reversal candles, the Hanging Man candle should not be relied on alone. It's better to wait for confirmation in the next candle (like a strong red candle or a break of nearby support), or to combine it with other technical indicators such as RSI or moving averages.
Practical Example:
Imagine a stock that has been rising for several sessions, then a Hanging Man candle appears — this is a warning signal: Has the momentum ended? Have the big players started to liquidate? Close monitoring afterward may open up an excellent selling opportunity.
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