![]() ![]() (The exception to this rule is if the first real body of the engulfing pattern is so small it is almost a doji (or is a doji). The second real body of the engulfing pattern should be the opposite color of the first real body.The market has to be in a clearly definable uptrend or downtrend, even if the trend is short term.Another bearish verification could be a black real body session with a lower close than the hanging-man sessions close.The greater the down gap between the real body of the hanging-man day and the opening the next day the more likely the hanging man will be a top. Bearish confirmation for hanging man is gap down next day.Hanging Man type of price action only shows that the market starts to sell off, it has become vulnerable to a fast break. Wait for bearish confirmation with the hanging man.Although the real body of the hammer or hanging man can be white or black, it is slightly more bullish if the real body of the hammer is white.The longer the lower shadow, the shorter the upper shadow and the smaller the real body the more meaningful the bullish hammer or bearish hanging man. ![]() It should have no, or a very short, upper shadow.A long lower shadow should be twice the height of the real body.The color of the real body is not important. The real body is at the upper end of the trading range.1) The hammer and hanging man can be recognized by three criteria: ![]()
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