Hanging Man

The hanging man is the opposite of a hammer. The hanging man shows that an upward trend is about to end and that the stock will fall.

1. The stock will have gone up over the last few sticks.
2. The stock falls down in value after the open.
3. The stock will eventually rally back to its opening total, but it will still be down in value for the day.
4. The candlestick should have a lollipop-like look to it.
5. At this juncture, the stock should start to fall in value.

Use the opposite strategy for entering a position with the hanging man as you did with the hammer. Enter into a put option or a short-trade as the hanging man is formed.