Hammer & Hanging Man
A long lower wick that means opposite things depending on where it appears.
The hammer and the hanging man are the identical candleA chart bar showing a period’s open, high, low and close. shape: a small body near the top with a long lower wick (and little or no upper wick). What makes them opposite signals isn’t the shape — it’s where they appear.
- Hammer — appears after a *downtrendThe prevailing direction of price: up, down or sideways.*. The long lower wick shows sellers pushed price way down, then buyers slammed it back up by the close. A bullish reversal hint: buyers are stepping in.
- Hanging man — the same shape, but after an *uptrendThe prevailing direction of price: up, down or sideways.*. Here the long lower wick reveals that, for the first time, sellers were strong enough to drive a deep intradayBuying and selling within the same trading day. drop. A bearish warning: the rally may be tiring.
Same candleA chart bar showing a period’s open, high, low and close., opposite meaning — because a candlestickA chart bar showing a period’s open, high, low and close. is only the crowd’s reaction at a particular point in the story. A long lower wick after a fall says “buyers defended” (bullish); the very same wick after a long rally says “sellers finally showed up” (bearish). This is the whole lesson of candlesticks in miniature: the shape is meaningless without the trendThe prevailing direction of price: up, down or sideways. it sits in.
ExampleAfter a three-week slide, a hammer forms — the next day gaps up and rallies: buyers confirmed. The identical candleA chart bar showing a period’s open, high, low and close. after a three-week rally is a hanging man — if the next day falls, sellers confirmed. Identical pixels, opposite trades.
Key takeawayHammer and hanging man shareA unit of ownership in a company. one shape (small top body, long lower wick). After a downtrendThe prevailing direction of price: up, down or sideways. it’s a bullish hammer (buyers defended); after an uptrendThe prevailing direction of price: up, down or sideways. it’s a bearish hanging man (sellers appeared). Location flips the meaning.
FAQs
How long should the lower wick be?
A good rule of thumb is a lower wick at least about twice the height of the body, with little or no upper wick. The longer the wick relative to the body, the more dramatic the rejection — and the stronger the signal, once confirmed by the next candle.