Candlestick Patterns

Hammer and Hanging Man

One shape, opposite meaning — how location turns a small body with a long lower wick bullish or bearish.

The hammer and the hanging man are the same candle: a small body near the top of the range with a long lower wick and little or no upper wick. The long lower wick means sellers pushed price down hard but buyers rejected those lows and closed it back near the top. What the candle means depends entirely on where it appears.

Same shape, two stories

At the bottom of a downtrend, this candle is a hammer — a bullish sign that sellers tried to extend the move and failed. At the top of an uptrend, the identical shape is a hanging man — a warning that selling pressure has appeared even though buyers managed to recover the close. Location decides.

small body, long lower wick
Small body up top, long lower wick: a hammer at lows, a hanging man at highs.

Confirmation

Neither candle is a trade by itself. A hammer is confirmed by a strong close above it on the next candle; a hanging man by a breakdown below it. The longer the lower wick relative to the body, the stronger the rejection it represents.

Check your understanding

  1. 1. A hammer and a hanging man differ by…

  2. 2. The shape is a small body with…

  3. 3. At the bottom of a downtrend, this candle is a…

  4. 4. The long lower wick means…

  5. 5. A hammer is confirmed by…

Answer all 5 to check