The main difference between the Hanging Man and Hammer candlestick patterns is that Hanging Man appears in uptrends and suggests a potential reversal downwards, while the Hammer occurs in downtrends, indicating a possible upward trend reversal. Both have similar shapes but different contexts.
Content:
- Hanging Man Candlestick Meaning
- What Is Hammer Candlestick?
- Difference Between Hanging Man and Hammer
- Hanging Man Vs Hammer Candlestick Pattern – Quick Summary
- Difference Between Hanging Man And Hammer – Faqs
Hanging Man Candlestick Meaning
The Hanging Man candlestick is a bearish pattern signaling a potential trend reversal. It appears at the end of an uptrend and features a small upper body with a long lower shadow. This suggests selling pressure, warning of a potential downturn in price.
The Hanging Man candlestick is recognized by a small upper body and a long lower shadow, appearing at the end of an uptrend. Its shape resembles a hanging figure, hence the name.
This pattern indicates that sellers are starting to outweigh buyers, despite a bullish trend. It often serves as a warning sign for investors that the current uptrend might be losing momentum and could reverse soon.
For Example: If a stock’s price has been rising and reaches Rs 150, and then forms a Hanging Man with an open and close near Rs 145 and a low of Rs 130, it suggests a potential trend reversal from the uptrend.
What Is Hammer Candlestick?
A Hammer candlestick is a bullish reversal pattern occurring at the end of a downtrend. It features a small upper body and a long lower shadow, resembling a hammer. This indicates that despite selling pressure, buyers regained control, potentially leading to a trend reversal.
The Hammer candlestick is identified by its short upper body and long lower tail, appearing during a downtrend. Its unique shape resembles a hammer, indicating a strong buying interest from investors after a period of selling.
This pattern suggests a potential shift in market sentiment. Even though the price may open low and face selling pressure, a strong close near the open signifies buying strength, hinting at a possible upward trend reversal in the following periods.
For example: If a stock in a downtrend opens at Rs 120, drops to Rs 100, but then rallies to close near Rs 120, forming a Hammer candlestick, it indicates buyers are taking control, suggesting a potential upward reversal.
Difference Between Hanging Man and Hammer
The main difference between the Hanging Man and Hammer candlesticks is that Hanging Man appears in an uptrend and suggests a bearish reversal, while the Hammer forms a downtrend, indicating a potential bullish reversal. Their shapes are similar, but their contexts differ.
| Feature | Hanging Man | Hammer |
| Appearance | At the end of an uptrend | At the end of a downtrend |
| Shape | Small body with a long lower shadow | Small body with a long lower shadow |
| Color | Can be either red or green | Can be either red or green |
| Market Implication | Suggests the potential for a bearish reversal | Indicates potential for a bullish reversal |
| Psychology | Indicates selling pressure overcoming buyers | Shows buying pressure overcoming sellers |
| Confirmation | Needs the next candle to confirm the downtrend | Requires next candle to confirm uptrend |
To understand the topic and get more information, please read the related stock market articles below.
Hanging Man Vs Hammer Candlestick Pattern – Quick Summary
- The Hanging Man candlestick, a bearish pattern, signifies a potential reversal. Appearing at an uptrend’s end with a small upper body and long lower shadow, it indicates increasing selling pressure, hinting at a forthcoming price downturn.
- The Hammer candlestick, a bullish pattern, forms at a downtrend’s end with a small body and long lower shadow, resembling a hammer. It signifies buyers overcoming selling pressure, hinting at a potential trend reversal.
- The main difference between Hanging Man and Hammer candlesticks is that Hanging Man appears in uptrends signaling a bearish reversal, while Hammer shows up in downtrends, hinting at a bullish turnaround. Their shapes are alike, but their market indications vary.
- Start your investment journey with Zero Account Opening Charges and a ₹20 brokerage fee for Intraday and F&O orders. Enjoy Lifetime Free ₹0 AMC with Alice Blue!
Difference Between Hanging Man And Hammer – Faqs
The main difference is that Hanging Man occurs at the end of an uptrend, suggesting a bearish reversal, while the Hammer appears in a downtrend, indicating a bullish reversal potential.
The Hammer candlestick pattern is a bullish signal at the end of a downtrend, characterized by a short body and a long lower wick, indicating that buyers are regaining market control from sellers.
A Hammer Candlestick is identified by a small upper body and a long lower shadow, at least twice the body’s length. It appears at the end of a downtrend, signaling a potential bullish reversal.
The Hanging Man is bearish because it appears after an uptrend, indicating that sellers are starting to outnumber buyers. This can lead to a potential reversal as the market sentiment shifts from bullish to bearish.
It’s called a Hanging Man because its shape resembles a figure hanging from a noose. With a small body and long lower shadow, it visually mimics a person suspended in the air, reflecting its bearish signal.
We hope that you are clear about the topic. But there is more to learn and explore when it comes to the stock market, commodity and hence we bring you the important topics and areas that you should know:
