Bearish Candlestick Pattern:
Bearish Reversal candlestick patterns indicate that the ongoing uptrend is going to reverse to a downtrend.
Thus, the traders should be cautious about their long positions when the bearish reversal candlestick patterns are formed.
Below are the different types of bearish reversal candlestick chart patterns:
Hanging man:
Hanging Man is a single candlestick pattern which is formed at the end of an uptrend and signals bearish reversal.
The real body of this candle is small and is located at the top with a lower shadow which should be more than the twice of the real body. This candlestick pattern has no or little upper shadow.
The psychology behind this candle formation is that the prices opened and seller pushed down the prices.
Suddenly the buyers came into the market and pushed the prices up but were unsuccessful in doing so as the prices closed below the opening price.
Hanging Man Single Candlestick Pattern
This resulted in the formation of bearish pattern and signifies that seller are back in the market and uptrend may end.
Traders can enter a short position if next day a bearish candle is formed and can place a stop-loss at the high of Hanging Man.
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Below is an example of Hanging Man Candlestick Pattern:
