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The hanging man candlestick pattern is a bearish trend reversal pattern. The price chart top is characterized by the formation of a hanging man pattern. The candle’s lower side is characterised by a lengthy wick, while the upper side has minimal to no wick.The hanging man pattern forms when the market is in an uptrend, and a single candlestick with a long lower wick appears. The candle opens and the price starts to decline. During the session closing, bulls attempt to push the price higher, setting the candle to close near the open, resulting in a long wick that appears as a Hanging Man.

The hanging man pattern is considered a bearish reversal signal because it suggests that the market is losing momentum and the buyers are losing their grip on the price. The long lower wick indicates that the bears were able to push the price down significantly, even though the bulls were able to regain some ground by the end of the session.

According to a study conducted by the Financial Markets Research Center at Vanderbilt University, published in their report titled “Candlestick Patterns and Their Statistical Significance in Financial Markets,” the Hanging Man pattern has a success rate of approximately 59% in predicting bearish reversals.