In the world of trading, it's not enough to just chase prices — you must observe behavior! And this is where the importance of the Hanging Man candle comes in, one of the most famous Japanese candles that signals a reversal of the bullish trend and alerts to the possibility of an imminent decline.
The general shape of the candle:
Small body (top part of the candle).
Long lower shadow (at least twice the length of the body).
Upper shadow is either very short or non-existent.
Generally appears after a series of bullish candles.
What does this mean?
The Hanging Man candle indicates that buyers are still trying to push the price up, but sellers have started to appear strongly during the session, increasing the likelihood of a trend reversal.
Is it sufficient to enter a sell trade?
No. Like most reversal candles, the Hanging Man candle should not be considered in isolation. It is better to wait for confirmation on the next candle (such as a strong red candle or a nearby support break), or to combine it with other technical indicators like RSI or moving averages.
Practical example:
Imagine a stock that has risen for several sessions, then a Hanging Man candle appears — this acts like a warning sign: has the momentum ended? Are the big players starting to liquidate? Careful observation afterwards can open an excellent selling opportunity.
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