Candlestick Charting 

31. How to Trade the Hammer Hanging Man Candlesticks

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VIDEO NOTES
A lesson on how to trade the Hammer and also Hanging Man Candlestick Chart Patterns for active investors as well as investors in the foreign exchange, futures, and stock exchange.

Like the Spinning Top and Doji which we have studied in previous lessons, the Hammer candlestick pattern is comprised of one candle. The candle light resembles a hammer as it has a long reduced wick and also a short body at the top of the candle holder with little or no upper wick. In order for a candle to be a valid hammer most traders state the reduced wick must be two times above the dimension of the body remedy of the candle light, as well as the body of the candle have to go to the upper end of the trading variety.

When you see the Hammer form in a drop this signifies a potential turnaround in the marketplace as the lengthy reduced wick stands for a duration of trading where the sellers were originally in control however the purchasers had the ability to turn around that control as well as drive prices back up to close near the high for the day, hence the short body on top of the candle.

After seeing this pattern form out there most investors will wait on the following period to open up greater than the close of the previous period to verify that the customers are actually in control.

Two added things that investors will certainly search for to position more value on the pattern are a long reduced wick and also a boost in quantity for the time period that formed the hammer.

Chart Example

The Hanging Male

Photo

The Hanging Man is generally the exact same thing as Hammer development but as opposed to being located in a sag it is located in an uptrend. Like the Hammer pattern, the Hanging man has a tiny body near the top of the trading range, little or no upper wick, as well as a lower wick that is at least two times as large as the body of the candle light.

Unlike the Hammer however the selling pressure that develops the lower wick in the Hanging Guy is viewed as a prospective indication of more marketing pressure ahead, even though the candle light enclosed the top end of its variety. While the reduced wick of the Hammer stands for marketing stress too, this is to be anticipated in a downtrend. When seen in an uptrend however selling pressure is an indication of potential extra selling stress to find as well as thus the classification of the Hanging Male as a bearish reversal pattern.

As with the Hammer and just like the majority of one candle patterns most traders will certainly wait on confirmation that marketing stress has actually in reality held by looking for a reduced open on the following candle light. Investors will certainly also place added significance on the pattern when there is an increase in quantity throughout the period the Hanging Guy types in addition to when there is a longer wick.

Chart Instance

That finishes our lesson for today. In our next lesson we will consider two extra turnaround patterns which are known as the Inverted Hammer as well as The Capturing Beginning Candlestick Patterns so we wish to see you because lesson.

As constantly if you have any concerns or remarks please leave them in the comments area listed below, as well as all the best with your trading!

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20 Thoughts to “31. How to Trade the Hammer Hanging Man Candlesticks”

  1. Mujeeb Ur-Rehman

    THanks. Great vid.

  2. InformedTrades

    Hi Mujeeebyzai, Thanks for the feedback i am glad you liked it. Good luck with your trading.

    Best Regards, David

  3. InformedTrades

    Thanks again for the comment jamalt68. I really appreciate the feedback please keep the comments coming. Best Regards, Dave

  4. InformedTrades

    Hi Aasyraf, Yes you are correct I accidentally used the same slide for both the hammer and the hanging man so I say it correctly but the picture before the chart example should say downtrend. I will correct in the next version of the videos. Best Regards, Dave

  5. InformedTrades

    Hi AM2M, Thanks for the comment and for watching I am glad you like the videos. Best Regards, Dave

  6. InformedTrades

    I am going for the superhero one outfit look;-) Best Regards, Dave

  7. InformedTrades

    Thanks for the comment and for watching I am glad you like the video. Most traders agree that these chart patterns will work on any timeframe, however the longer the timeframe the pattern shows up on the more relavence a trader will normally give it. Best Regards, Dave

  8. Age of Reason

    thank you for these insightful videos. you’re a good instructor.

  9. InformedTrades

    thanks for the comment and for watching I am glad you like them. Best Regards, Dave

  10. Age of Reason

    under The Hammer it should read “a reversal pattern when found in a downtrend.”

  11. InformedTrades

    thanks for the correction there and my apologies for the mistake. Best Regards, Dave

  12. lostinreallife

    Hi Dave, Your videos are FANTASTIC! I can’t stop watching. You are a super teacher extraordinaire!
    I have 2 questions:
    – In the Trading the Hanging Man Chart (at 5.39), is the Hanging man supposed to be in white or black?
    – If the volume is not up on the Hammer/Hanging man, but up on the following candlestick, does it still count as a confirmation?
    Thank you 🙂

  13. gambler

    when to enter a hammer trade ?

    a) on the break off high on the day of hammer
    b) on hte reversal to the low of hammer
    c) or any thing else

  14. Adebola Babatunde

    On the last reversal pattern the candle formed is hollow… I thought that would make it a Hammer?

    -Ade

  15. FreeFOREXautoROBOT

    Thanks for great video.
    I prefer Free Forex EA…have a great results

  16. Genius Superman

    …10/10 brilliant

  17. aqeel3344

    i feel technical analysis works best in stocks than forex !

  18. Oscar Cuban

    Great stuff man it’s HAMMERTIME!

  19. barry jaye

    Very well explained.Thanks.

  20. M F S

    Thank you, very informative

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