hanging man

Discussion in 'Technical Analysis' started by jonp, Oct 14, 2010.

  1. jonp


    Hanging Man

    What Does Hanging Man Mean?
    A bearish candlestick pattern that forms at the end of an uptrend. It is created when there is a significant sell-off near the market open, but buyers are able to push this stock back up so that it closes at or near the opening price. Generally the large sell-off is seen as an early indication that the bulls (buyers) are losing control and demand for the asset is waning.

    Investopedia explains Hanging Man
    This formation does not mean that the bulls have definitively lost control, but it may be an early sign that the momentum is decreasing and the direction of the asset may be getting ready to change. The reliability of this signal is drastically improved when the price of the asset decreases the day after the signal. Hanging man formations can be more easily identified in intraday charts than daily charts and are a very popular formation used by day traders.

    If this pattern is found at the end of a downtrend, it is known as a "hammer".
  2. sniper


  3. It "works" when it works. It doesn't when it doesn't. :(
  4. jonp


    looks like thursday and friday were both classic definitions of the hanging man and as it stand now the dow is off 51 and the s&p is down 6.10 points. I will look to add to my shorts early monday morning if the selling persists. this rally is very overextended imo.
  5. Just wait until AAPL earnings tomorrow vault Nasdaq and the rest of the market another few percent.

    Overextended? Perhaps, but that doesn't mean shit.
  6. joe4422


    On the SandPs I don't see a hanging man at all. I see small bodied candles, a doji, and a failure to make a new high, all of which are pretty self explanatory. A potential top is being formed.

    No genius in the world knows if this is the top or not, but the risk/ reward is awesome at potential tops. You could fail 20 times, succeed once, and make profits.
  7. sniper


    Yah, hanging man only on NASDAQ Composite. S&P can't seem to close over 1180 resistance.

  8. A trader needs to be carefull about where he believes he sees a hanging man. Some indices don't properly show gaps because of how the data is reported. If you are seeing hanging man, shooting star, hammer, gravestone doji, etc, take a look at other indices and see if it looks similar.

    These "potential reversal star" days only call into question the continuation of the trend. Sometimes they are spot-on, other times they didn't mean anything.
  9. wrbtrader


    Completely agree because I've seen often (not a few times but a lot) where one data source shows a particular Japanese Candlestick pattern and another data source shows something different.

    It's best to compare with another highly correlated trading instrument or index if the price action identification is the same.