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Hammer- When there is a continuous fall in trend then a body is formed with lower tail is two times its body,greenish and the upper tail is little visible then it is called Hammer and it is a bullish.
Hanging man-When there is bullish,then a red body is formed with upper tail is taller then it is a Hanging man (reversal of Hammer).
In both the cases volume is high, when these patterns form.
The Hanging Man and Hammer are candlesticks patterns indicating trend reversal and are identical in nature.
Hanging man appears in a chart with an upward trend indicating bearish reversal. When the high and open are the same, a bearish hanging man candlestick is formed and it is considered a stronger bearish sign than when the high and close are the same, forming a bullish hanging man but it is still bearish because the day closed with gains.
Hammer appears in a chart with an downward trend indicating bullish reversal. The hammer formation is created when the open, high and close are the same price. Also there is a long lower shadow twice the length as the real body. When the high and close are the same, a bullish hammer candlestick is formed and it is considered a stronger formation because the bulls are able to reject the bears and it is able to push price past the opening price.
Hammer is a trend reversal pattern with a bullish look.The prior trend should be a downtrend.A hammer should have very minimal upper tail and should be green in colour with increase in volume.The lower tail should be equal or more than twice the body size of the hammer.The trader can go long when the price crosses the high of the upper tail and can have a stoploss that is equal to the low of the hammer.
Hanging man is a trend reversal pattern with a bearish look.The prior trend should be an uptrend.A hanging man should be red in colour with a minimal or almost no lower tail with increase in volume.The hanging man should have an upper tail that is equal or greater than twice the size of the body.The trader can go short after the price goes below the low of the hanging man and can have a stoploss that is equal to the high of the hanging man.
In both hammer/hanging man the target is equal to twice the risk taken.
Hammer is a bullish candlestick pattern that occurs when a security trades significantly lower than its opening, but rallies later in the day to close either above or near its opening price. It appears after a significant price fall. Its lower tail should be min. 2 times of the body size with no upper tail.
Buy when the price moves above the upper tail of the hammer and exit when it comes to the lowest point of the hammers’ lower tail.
Hanging man is a bearish candlestick pattern that forms at the end of an uptrend.It is created when there is a significant sell off near the market open, but buyers are able to push this stock so that it closes at or near the opening price.
Hammer and hanging man patterns are very reliable and powerful, appears rarely and shows the reversal in trend, hence it is popular.
Hammer: It appears after significant price fall. Lower tail should be at least 2 times of the body and upper tail should be very small and body should be green with high volume.
When to Buy: Long position can be created when the price increases above the upper tail(A) and stop loss is the lowest price of hammer(B). Risk = A~B, Target: A+ (1.5 or 2 times of risk). Selling should happen when price reaches the target or at stop loss(price goes below B).
Hanging Man: It appears after significant increase in price. Upper tail should be atleast 2 times of the body and lower tail should be invisible or small. Body should be red with high volume on that day.
When to Sell: Short position can be created when the price goes below the lower tail(A) and stop loss is the highest price of the hanging man(B). Risk = A~B; Target: A+(1.5 to 2 times of risk). Buying should happen when the price reaching the target or at stop loss(price goes above B).
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