| Steve Nison is considered to be an authority on | | | | uptrend. You will find the hanging man at the very |
| candlestick charting. In the last decade, candlestick | | | | top of the price action. This means that the uptrend |
| charting has become highly popular with the traders. | | | | is about to end and an downtrend is underway. |
| Now many use candlestick charts in their daily trading. | | | | Traders should take action accordingly. If a hanging |
| On the candlestick charts there are some very | | | | man is formed and the price actions till continues |
| important candlestick patterns that can give leading | | | | upwards, it means there was no hanging man. |
| indication of the trend reversal that is about to take | | | | Hanging man can only be formed at the very top of |
| place in the market. If you can spot these candlestick | | | | the price action. It should be confirmed with the |
| patterns accurately, you can become a highly | | | | volume information. |
| successful trader. A candlestick body is formed with | | | | Bullish and Bearish Engulfing Patterns are another |
| the opening and closing price of the stock,security or | | | | candlestick trend reversal patterns. A Bullish Engulfing |
| the currency pair and the wick is formed by the | | | | Pattern is formed when a candlestick bar opens |
| opening and the closing price. By taking a look at the | | | | lower than the previous candlestick's close and closes |
| candlestick charts, you can quickly judge the mood | | | | higher than the previous candlestick's open. |
| of the market whether the bulls are prevailing or the | | | | In simple terms, the candlestick body engulfs the |
| bears are prevailing! | | | | previous candlestick's body. Why is this pattern |
| A Hammer represents the bottom of the trend. It | | | | bullish? It represents a major defeat for the bears. |
| occurs at the end of the downtrend. Hammers have | | | | Bullish Engulfing patterns are highly accurate but if the |
| small bodies and long shadows. Hammers have infact | | | | subsequent price trades below them than the pattern |
| long lower shadow and a small upper shadow. What a | | | | failed. |
| hammer reveals is that after the price of the security | | | | Similarly a Bearish Engulfing Patterns occurs at the |
| opened on the market, sellers drove it down further. | | | | end of an uptrend and marks important reversals. |
| By the end of the day, buyers have recouped much | | | | They are characterized by two bar formations. The |
| of their losses to end the day near or at the high. No | | | | first candlestick represents a small body. The second |
| Hammer is complete without confirmation. If the price | | | | candlestick opens higher than the previous candlestick |
| action directly after the Hammer is down, no hammer | | | | close and closes lower than the previous candlestick |
| has taken place. A true Hammer cannot have its low | | | | open, thus engulfing the previous candlestick body. |
| violated by subsequent price action. Volume should | | | | In the last decade use of candlestick patterns have |
| also be taken into account. If the volume is heavy, | | | | become highly popular among the traders. These |
| the Hammer formed is genuine. | | | | candlestick patterns are just a few of the many that |
| The other candlestick pattern as important as the | | | | can be used in confirming a change in the price action. |
| hammer is the Hanging Man. Hammer is formed in the | | | | Combining technical indicators with these candlestick |
| downtrend and the hanging man is formed in an | | | | patterns can be very powerful. |