The Hanging Man

18 Feb

The Hanging Man Reversal is a common candlestick pattern we see near the end of a rally. The psychology behind the pattern is simply, retail traders or “late to the party charlies” want to get a piece of the action, but the majority of the move has already happened.
If the following day closes below the hanging man’s close, all the bulls who went long on the hanging man’s close are now underwater in their positions and selling occurs. In order for this pattern to confirm a reversal we need a close the following day below the hanging man’s close.

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