Hammer Candlestick and Hanging Man Candlestick
What is Hammer Candlestick?
Hammer candlestick looks like a hammer and it’s a standalone candlestick which often found at the bottom of a downtrend having a long wick below its body indicating bulls taking control overbears and the market is most likely to reverse. A hammer can be bullish or bearish, colour doesn’t matter in it and works the same. The hammer candle itself represents that initially bears pushed the price down heavily and after that bull has taken over controls and the price closes nearby its open price.
Hammer and Hanging Man look the same the only difference is formed in a trend.
How to Identity Hammer Candlestick?
Before considering any candlestick as a hammer check few characteristics:
- Open and close of the candlestick is not so far.
- The length of the candle should be twice or thrice of the body or more.
- The candle should appear after a good downtrend, not a short term downtrend.
How to trade Hammer candlestick:
Buy after the closing of the candle and stop loss below the low of the candle and take profits is up to you but we consider it till previous resistance.
Live Example
As you can see after Hammer candlestick market trading higher and higher.
What is Hanging Man Candlestick?
Hanging Man candlestick is the same as hammer candlestick the only difference between is it often found on the top of the up-trending market, having a long wick below its body and the market is most likely to reverse. Colour doesn’t matter and works the same.
How to Identity Hanging Man Candlestick?
- Open and close of the candlestick is not so far.
- The length of the candle should be twice or thrice of the body or more.
- The candle should appear after a good downtrend, not a short term downtrend.
How to trade Hammer candlestick:
Buy after the closing of the candle and stop-loss above the high of the candle and take profits is up to you but we consider it till previous support.
Live Example
After Hanging Man appeared we can sell a heavy fall giving us a good profit.
Note: Always Trade candlesticks patterns wisely with proper risk management else your trading funds will always at high risk.
