How to Detect the Market Reversal by Hanging Man

A hanging man is formed when a dramatic sell-off occurs at the market open, but bulls manage to push the market or security back up to the level where the market opened. A hanging happens at the end of the market uptrend.

You can see from the next chart, a hanging man was detected in mid-November 2012. It looked like a “T” shape with long tail. Technically speaking, if this phenomenon happened, the buyers are losing control in the tug-of-war. An imminent and large-scale sell-off might be seen. Please keep in mind, the market does not necessarily plunges when a hanging man is formed. Traders can combine it with other technical indicators to identify the potential market reversal.

                                       Source: chart form stockcharts.com, data compiled by blogger.

Thanks for your visiting and reading. Happy trading!

 

If you want to know more about candlestick techniques, you can visit:

http://top5indicators.blogspot.com/2013/09/how-to-read-candlestick-charts.html

http://top5indicators.blogspot.com/2013/09/how-to-detect-market-reversal-by-doji.html