What it means
Both candles have a small body near the top of the range and a lower wick at least twice the body's length, with little or no upper wick.
At the bottom of a decline it is called a hammer (potentially bullish). At the top of a rally it is called a hanging man (potentially bearish).
Why traders use it
The long lower wick shows sellers pushed price down but buyers brought it back up before the close. After a decline that rejection can mark exhaustion; after a rally it shows selling pressure appearing.
Chart examples
Hammer after a decline
Hanging man after a rally
How to identify it objectively
- 1Lower wick ≥ 2× body.
- 2Upper wick ≤ 10–25% of the range.
- 3Body in the upper third of the range.
- 4Context decides the name: after a decline = hammer, after a rally = hanging man.
Bullish use
- 1Hammer after a decline, ideally at support.
- 2Next candle closes above the hammer's high.
- 3Stop below the hammer's low.
Bearish use
- 1Hanging man after a rally, ideally at resistance.
- 2Next candle closes below the hanging man's body.
- 3Stop above its high.
What confirms it
- Confirmation close in the expected direction.
- Location at a level.
What invalidates it
- Price closes beyond the wick end (below a hammer).
- No confirmation candle.
How a hypothetical setup is built
Entry
On the confirmation close.
Stop
Beyond the long wick.
Target
The prior swing or a 2R multiple.
A hypothetical illustration of how the concept is turned into a plan, not a recommendation. Practise it on a paper account first.
Related concepts
- Candlestick PatternsPin Bar
- Candlestick PatternsDoji Candlesticks
- Candlestick PatternsShooting Star and Inverted Hammer
Historical testing
Not tested on The Tradeskill.
Limitations: when it fails
- The long wick makes the stop wide.
- Hanging men are especially unreliable without confirmation.
- Shape rules vary between sources.
Knowledge check
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