Hanging Man

The Pattern

A Hanging Man is a single bar with three shape constraints:

1. The body sits in the upper third of the bar’s range.
2. The lower wick is at least twice the body’s height.
3. The upper wick is short or absent.

The bar must print after a prevailing uptrend. The same shape after a downtrend is a Hammer with the opposite bias.

The Story Behind It

The session opened near the high, sellers pushed price well below it during the day, and buyers then absorbed the decline and closed price back near the open. The exact same footprint as a Hammer, but the prior trend changes the reading entirely. After an uptrend the long lower wick is treated as a warning that selling pressure has appeared for the first time in the rally, even though the buyers managed to absorb it this time. The classical analyst’s expectation is that the absorption may not hold the next session.

The pattern is one of the trickier ones in classical candlestick analysis because the actual bar shape gives no obvious bearish signal: buyers won the session. The bearish reading comes entirely from the fact that sellers were able to push price down at all during a rally where they had previously been absent.

When It Tends To Work

• After a sustained uptrend where the appearance of a long lower wick is genuinely notable.
• When the next session confirms by opening weak and failing to recover. Many practitioners wait for this confirmation before acting.
• At resistance levels where the wick reaches into an area that has previously stalled rallies.

When It Tends To Fail

• When taken without the next-session confirmation. Acting on the hanging man alone has historically been low-edge.
• In strong, persistent uptrends. The same shape can print repeatedly during a steady rally without any of them marking a top.
• In equity index futures with a structural long bias. The short side of any reversal pattern faces an additional headwind.

How This Strategy Trades It

Enter short at the close of the hanging man bar. Hold for hold_bars sessions (default 5), then flatten unconditionally. This strategy takes the entry on the pattern bar itself, not on a confirmed follow-through bar.

Related Patterns

• Hammer: same shape, bullish context. The shape alone is not the signal, the prior trend is.
• Shooting Star: same trend context, opposite wick direction.
• Bearish Engulfing: a stronger two-bar version of the reversal idea.

Try It Yourself

The default preset uses 1-contract sizing on NQ daily bars. The form lets you change the contract, timeframe, hold length, and contract count.