Hanging Man & Hammer

Hanging Man & Hammer

A Hanging Man is a topping formation (Bearish) and a Hammer is a bottoming formation (Bullish). They are the same shape candle. The only difference is that the Hanging Man represents a top in the market (the market hung itself) and the Hammer represents a bottom in the market (the market is Hammering out a bottom). See Example 16.

Both the Hanging Man and the Hammer are excellent indicators as long as Bar 3 confirms them. Take a look at Example 17 again and look at the forth bar from the right in what was Bar 2 of a Bottom Blip. You could call this a Hammer.


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