Home Forex THE HANGING MAN STRATEGY. MY EXPERIENCE OF USING! – Analytics & Forecasts – 27 July 2023

THE HANGING MAN STRATEGY. MY EXPERIENCE OF USING! – Analytics & Forecasts – 27 July 2023

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THE HANGING MAN STRATEGY. MY EXPERIENCE OF USING! – Analytics & Forecasts – 27 July 2023

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Most merchants will agree that there are few issues extra pleasing than using a gradual up pattern all the way in which to the highest. Sadly, because the previous adage goes, “all good issues should come to an finish”. That is notably true in buying and selling which is why it’s important to know when a transfer to the draw back is more likely to emerge and how one can handle your threat accordingly. On this article, we’ll share with you what the hanging man candlestick reversal sample is and how one can commerce it.

WHAT IS THE HANGING MAN?

A dangling man candle (aptly named) is a candlestick formation that reveals a pointy improve in promoting strain on the peak of an present uptrend. That is usually caused by many market members believing the market has reached its highest degree ensuing within the ‘bears’ outweighing the ‘bulls’. This may be noticed within the GBPUSD chart beneath the place it’s clear to see the purple candle showing on the prime of the upward pattern because of mass promoting strain.

GBP/USD HANGING MAN CANDLESTICK

CHARACTERISTICS OF THE HANGING MAN CANDLE

The hanging man candle is characterised by having a small actual physique, little or no higher shadow (wick) and a decrease shadow no less than twice the size of the physique.

  1. Upward pattern: The hanging man can solely be recognized as such as soon as it has fashioned on the prime of an uptrend.
  2. Opening degree: The hanging man candle can both be a inexperienced candle (bullish), or a purple candle (bearish) though, the bearish candle gives a greater indication of a weakening market.
  3. Higher shadow: A small higher shadow signifies that there was an try to keep up the present uptrend earlier than the numerous drop within the worth of the Pound Sterling.
  4. Lengthy decrease shadow: That is in all probability one of the insightful observations on the candle, depicting a big dump earlier than the bulls tried to regains some floor forcing the closing worth to finish up considerably nearer to opening ranges however nonetheless down for the interval.
  5. Closing degree: On this case the closing degree was beneath the opening degree and subsequently, confirms that it is a bearish hanging man candle.

IDENTIFYING HANGING MAN CANDLESTICK TRADING SIGNALS

The hanging man candlestick can be utilized to establish a brief commerce (bearish view of the market) because the lengthy shadow signifies huge promoting. The true check of the legitimacy of the hanging man candlestick is commonly revealed in subsequent exercise on the chart. If the next candle strikes additional down and breaks beneath the brief time period upward pattern line, this may be seen as a continuation of the downward long run pattern. One other doable entry degree may very well be to enter the commerce as soon as the market has moved previous the low of the hanging man candle.

TRADING THE HANGING MAN?

You will need to view the hanging man candle formation in relation to the long run pattern. One of the simplest ways to do that is to utilize a number of timeframe evaluation. Begin off by viewing the market utilizing an extended timeframe chart just like the day by day or weekly timeframe to look at the course the market is tending to in the long run. Then, zoom-in utilizing a smaller timeframe chart (4 hour or 2 hour) to research the best entry level on your commerce.

Step 1: Establish the long run pattern

View the chart on an extended timeframe (maybe a day by day chart) to get an concept of the course the market is heading. You don’t want to position a commerce in the wrong way of the long run pattern.

Step 2: Recognizing your preferrred entry level

Making use of a shorter timeframe chart (4 hour chart), establish the best entry level. The hanging man candle formation gives us with a sign for a brief commerce.

Step 3: Make use of supporting indicators

Does the  Relative Energy Index affirm that the market has turned and now in a downward pattern? Has the 20 SMA line crossed over the 50 SMA line? Does the hanging man candlestick seem close to the highest of the brief time period uptrend? Is a related Fibonacci retracement degree close by?

Step 4: Place your commerce

Search for an entry level on the low of the hanging man candlestick. In case your bearish view of the market is right, you will notice subsequent worth motion shifting down – offering you with a sign to position your brief commerce.

Step 5: When to shut out of the commerce?

Every time coming into a commerce it’s all the time finest to have no less than a 1:2 Threat-to-Reward ratio. You’re risking half of what you plan to realize. Which means that the space out of your entry degree to your take revenue degree must be twice the space out of your entry degree to your cease loss degree. 

Be taught extra about worth motion buying and selling and different buying and selling associated subjects by subscribing to our channel.

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