Hammer & Hanging Man
Overview
The hammer and hanging man are single-candle patterns with small real bodies and long lower shadows (at least 2× the body). A hammer appears at the bottom of a downtrend (bullish), while a hanging man appears at the top of an uptrend (bearish). The long wick indicates that sellers pushed price down but buyers recaptured ground.
Key Concepts
2:1 lower shadow to body ratio, Small real body near the high, Colour of body is secondary to location, Inverted hammer / shooting star variations
Entry Signals
Hammer at key support with volume spike, Hanging man at resistance after extended uptrend, Next candle confirmation (close above hammer high / below hanging man low)
Exit Signals
For hammer: trail stop below the hammer's low. For hanging man: stop above the hanging man's high. Target the prior swing high/low.
Best Timeframes
4H, Daily, Weekly for highest reliability
Pro Tips
A hammer with a bullish (green/white) body is slightly more reliable than a bearish one. Volume confirmation is critical.
More Topics in This Category
Continuation Triangles
While not strictly a candlestick pattern, continuation triangles (ascending, descending, symmetrical) are multi-candle patterns where price contracts between converging trendlines. Breakouts from triangles tend to continue the prior trend. Triangles are measured-move patterns — the target equals the height of the triangle projected from the breakout point.
Pin Bar Setups
Pin bars are single-candle reversal patterns with a long tail (shadow) on one side and a small body on the opposite side. The tail shows a sharp rejection of a price level. Pin bars are the most widely used price action signal among naked chart traders and work on all markets and timeframes.
Shooting Star
The shooting star is a bearish reversal candle with a small body near the low and a long upper shadow (at least 2× the body). It appears at the top of uptrends and signals that buyers pushed price higher but sellers took control. It is the inverted version of the hammer.
Doji & Spinning Tops
Doji and spinning top candles signal indecision between buyers and sellers. A doji has nearly identical open and close prices, while a spinning top has a small body with long wicks on both sides. These patterns are most significant at the end of extended trends where they can foreshadow reversals.