Lesson 3 of 8 · Candles & Chart Patterns
Hammer & hanging man
Same shape, different meanings.
A hammer has a small body at the top, a long lower wick, and little or no upper wick. After a downtrend, it signals potential reversal: sellers drove price down hard but buyers stepped in before the close.
A hammer at a low.
The HAMMER label marks the candle. See the long lower wick: sellers pushed price deep below the open, but buyers recovered it before the close. That recovery is the signal. It's strongest at a known support level after a sustained move down.
The hanging man is the same candle at the top.
A hanging man looks identical to a hammer but forms after an uptrend. The long lower wick now carries a warning: sellers tried to take control even though buyers recovered by the close. The next candle's direction tells you which side actually won.
A hanging man forms after a rally. Which way does price go next?
Reveal what happened
It went down. Price moved lower after the HANGING MAN, confirming the bearish warning. This is a probability, not a rule: the same pattern sometimes precedes another leg up. Always wait for the next candle to confirm before acting, and size accordingly.
A candle with a long lower wick forms after a sharp uptrend near resistance. What pattern is this?
Show the answer
B. A hanging man, potential bearish warning. Trend location defines the name. The same long-lower-wick candle after a downtrend is a hammer; after an uptrend it becomes a hanging man.