The hangman candle, so named because it looks like a person who has been executed with legs swinging beneath, always occurs after an extended uptrend. The hangman occurs because traders, seeing a sell-off in the shares, rush in to grab the stock a bargain price.
In order for the Hanging Man signal to be valid, the following conditions must exist:
• The Forex pair must have been in a definite uptrend before this signal occurs. This can be visually seen on the chart.
• The lower shadow must be at least twice the size of the body.
• The day after the Hanging Man is formed, one should witness continued selling.
• There should be no upper shadow or a very small upper shadow. The color of the body does not matter, but a red body would be more positive than a blue or green body.
In order for the Hanging Man signal to be valid, the following conditions must exist:
• The Forex pair must have been in a definite uptrend before this signal occurs. This can be visually seen on the chart.
• The lower shadow must be at least twice the size of the body.
• The day after the Hanging Man is formed, one should witness continued selling.
• There should be no upper shadow or a very small upper shadow. The color of the body does not matter, but a red body would be more positive than a blue or green body.