Patterns/ One candle

One candle 6 min read

Hanging man

The hammer's shape, found at the top of an advance instead of the bottom of a decline. Same candle, opposite reading — which is the clearest demonstration on the whole site that a candlestick pattern is a claim about location, not about shape.

What the shape is

Small body near the top of the range, long lower wick, little or no upper wick — and it appears after an advance. Measured any way you like, it is a hammer. The name changes because of where it sits.

What it records is a period in which price fell a long way during the session and recovered before the close. At the bottom of a decline that reads as buyers defending. At the top of an advance it reads as something different: that selling appeared, in size, for the first time in a while — and the recovery that followed may be less reassuring than it looks.

The point of this page

Open the hammer page alongside this one and compare the candles. They are the same object. One is read as a floor and one as a warning, and the only thing separating them is what came before. If you ever wondered how much of pattern reading is really context reading, this is the answer.

When it means something

A hanging man that was worth noticingIllustrative
Six advancing candles, then a period that dropped hard mid-session before closing near its high. The advance does not make another high afterwards. The tail is the first visible evidence that sellers were willing to show up in size.

The reading is deliberately weaker than the hammer's. A hammer says buyers defended a price. A hanging man says sellers were present — and then failed to close it lower. That is a much softer claim, which is why it is usually treated as a reason to pay attention rather than a reason to do anything.

The same shape, meaning nothing

A hanging man inside a trend that kept goingIllustrative
Identical candle, identical proportions, a few candles further along in the same kind of advance. Price made new highs within days. Advances routinely contain sessions with a nasty intraday dip that gets bought back — that is what an advance looks like from the inside.

A candle that recovered is still a candle that recovered. Reading it as weakness requires everything around it to agree.

Telling them apart

  • Did the advance make a higher high afterwards? That single question settles it, and it settles it quickly.
  • How extended is the move? A hanging man six candles into a climb is noise. One after the move has run a long way is at least a data point.
  • Is it at a level? A hanging man right beneath a prior high is a test of that high. One in open space is a session with a dip in it.
  • What was the volume? A long tail on heavy volume means a lot of selling was absorbed. On light volume almost nothing happened.
The honest summary

The weakest common pattern, because the candle closes near its high — the sellers who appeared during the session did not win it. It is worth knowing mostly as a demonstration: the identical candle is called a hammer in one place and a hanging man in another, and nothing about the candle changed.

Terms used

Hanging man
A small body at the top of the range with a long lower wick, after an advance.
Hammer
The identical shape after a decline, read as a floor instead.
Extended
A move that has already travelled a long way without interruption.
Absorption
Selling being met with enough buying that price does not fall.

Patterns are the easy half

Reading the chart underneath them is the part that decides whether any of this is useful. The Charts track works through levels, volume, trend and timeframes from the beginning.

Start the Charts track