Hammer – Hanging Man

A hammer or hanging man is a single candlestick pattern that indicates a reversal of a trend.

It is known as a hammer pattern when it appears in a downtrend, while it is known as a hanging man pattern when it appears in an uptrend.

It is also possible to use this formation with Heikin ashi candles.

In the case of hammer and hanging man patterns, the body is relatively narrow and the upper shadows are negligible. The heikin ashi candle shows a narrow body because it opened near the average price of the previous body, and the average price of the current open, high, low, and close is around the same level. Although the price did not go above that level during the session, the low price was quite far away, resulting in a relatively large lower shadow.

On the heikin ashi charts, this pattern is significant when it appears after a strong uptrend or downtrend.

This pattern can be plotted on the chart by adding it from the study menu in TradePoint & RZone. The pattern is also available in the system builder section. By combining this pattern with other patterns and indicators, you can create your own trading strategies. For any group of stocks and market segments, you can scan and backtest stocks based on those strategies.