If you have visited the crypto market recently all you'll see is a bloody red summer and many more coins hanging by a thread. No one seems to know when this bearish run will end so I find it fitting that I look at some of the bearish candlestick patterns as of late.

The focal point of this article will be that pattern people call the hanging man. If you are familiar with that game hangman, I think that they got the idea from the drawing of the hangman. With that bit out of the way, I'll proceed with my little overview about this fatal pattern.

Hanging Man

In description, the hanging man is a one-candlestick pattern that has a short real body, a little to no upper wick and a long lower wick which is at least twice the height of the real body.

One noteworthy thing about this candlestick pattern is it can be either red (bearish) or green (bullish). Now don't be confused, whatever color this hanging man is, it is still considered as a bearish candlestick pattern. Why?

The long lower wick of the candle signifies that there has been a strong selling pressure within that timeframe that caused the asset's price to drop. Although the buyers have been able to pull the closing price closer to the opening price, it shows that the market sentiment towards the asset is inclined to fall.

For it to be a true hanging man, this pattern shall be observed in the upper part of an uptrend. This will not be valid if it appears amidst a downtrend because usually, the hanging man signals a probable price reversal of the asset. Traders often take this pattern as a sell signal, meaning it's about to get dirty because dumping time is coming.

One look at this candlestick pattern reminded me of another pattern. The hammer. And according to Quadency.com the hanging man pattern is the bearish equivalent of a hammer pattern. I find that interesting, so we do have partner patterns in that case.

Confirming the Hanging Man

Since the hanging man is another one candle stick pattern, it's confirmation may come at the next timeframe set. To confirm the hanging man, the asset should be in an uptrend and the closing price of the next candle must be lower than the hanging man's close.

I have observed some real life hanging man's while looking at the candlestick charts on Binance.

The image above is taken from the XRP/USDT candlestick chart analysis. This is a confirmed hanging man pattern since it followed all the criteria given and needed for it to be considered as a hanging man pattern.

This next image was taken from the BCH/USDT candlestick pattern.

Notice that the candlestick itself is green but it is still a bearish pattern. It is also important to note that the candle appeared on an uptrend and it effectively signaled a price drop that is evident through the following weeks.

Conclusion

To sum up the characteristics of the hanging man candle stick pattern it is necessary to observe the following points :

• Appears at the upper part of an uptrend

• short body, a little or no upper wick, long ( 2x body length) lower wick

• Succeeding closing price lower than the candle's closing price.

• May either be green or red

It is also imperative to note that seeing this pattern guarantees a price reversal of the asset, it just warns and signals that a price reversal is PROBABLE but not a certainty, as no one can be certain about the movement of prices of the asset especially in the cryptocurrency space.

Hey there!!!

Thank you for joining me again in learning another thing within the crypto realm. I hope that I was able to deliver my thoughts fairly clear and neat on this one. As per usual, if you have any thoughts, comments or suggestions with regards to this topic or any topic under the sun actually, you may reach me via the comment section below. You may also reach me on TG with the same username.

Once again, I appreciate your time and as always,

Cheers!!!

References :

Daniel Kurt 2021, Understanding the 'Hanging Man' Candlestick Pattern, Investopedia, accessed 24 May 2021, <https://www.investopedia.com/articles/active-trading/040914/understanding-hanging-man-optimistic-candlestick-pattern.asp>

Cory Mitchell 2020, Hanging Man Candlestick Definition and Tactics, Investopedia, accessed 24 May 2021, <https://www.investopedia.com/terms/h/hangingman.asp>

What is a hanging man candlestick pattern? n.d., What is a hanging man candlestick pattern?, ThinkMarkets ,accessed 24 May 2021, <https://www.thinkmarkets.com/en/learn-to-trade/indicators-and-patterns/bearish-patterns/hanging-man-candlestick-pattern/>

CFI n.d., Hanging Man Candlestick, Corporate Finance Institute, accessed 24 May 2021, <https://corporatefinanceinstitute.com/resources/knowledge/trading-investing/hanging-man-candlestick/>

Lead image : https://stock.adobe.com/ph/search?k=hangman+game