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Thomas Bulkowski’s successful investment activities allowed him to retire at age 36. He is an internationally known author and trader with 30+ years of stock market experience and widely regarded as a leading expert on chart patterns. He may be reached at

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Chart Patterns: After the Buy
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Bulkowski's Hanging Man

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Candles Chart
Small Patterns
Industrials (^DJI):
Transports (^DJT):
Utilities (^DJU):
Nasdaq (^IXIC):
S&P500 (^GSPC):
As of 04/19/2018
24,665 -83.18 -0.3%
10,672 -98.34 -0.9%
697 -0.72 -0.1%
7,238 -57.18 -0.8%
2,693 -15.51 -0.6%
Tom's Targets    Overview: 04/13/2018
25,300 or 23,400 by 05/01/2018
10,800 or 9,800 by 05/01/2018
670 or 710 by 05/01/2018
7,400 or 6,800 by 05/01/2018
2,750 or 2,600 by 05/01/2018

Written by and copyright © 2005-2018 by Thomas N. Bulkowski. All rights reserved. Disclaimer: You alone are responsible for your investment decisions. See Privacy/Disclaimer for more information.

My book, Encyclopedia of Candlestick ChartsEncyclopedia of Candlestick Charts book., pictured on the left, takes an in-depth look at candlesticks, including performance statistics.

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The hanging man is probably one of the better known candlestick patterns, but it does not work as many expect. Candle theory says it acts as a bearish reversal of the prevailing price trend, but my tests show that it is really a bullish continuation 59% of the time. Of course, that is what I call "near random." The hanging man appears frequently in a historical price series, but the trend after the breakout is dismal, ranking 87 out of 103 candle patterns where 1 is best.

Hanging Man Important Results

Theoretical performance: Bearish reversal
Tested performance: Bullish continuation 59% of the time
Frequency rank: 16
Overall performance rank: 87
Best percentage meeting price target: 86% (bear market, down breakout)
Best average move in 10 days: -3.60% (bear market, down breakout)
Best 10-day performance rank: 59 (bear market, down breakout)

All ranks are out of 103 candlestick patterns with the top performer ranking 1. "Best" means the highest rated of the four combinations of bull/bear market, up/down breakouts.

The above numbers are based on hundreds of perfect trades. See the glossary for definitions.

The ideal hanging man candlestick
Hanging Man
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Hanging Man Discussion

The hanging man candlestick is a popular one, but one that shows lousy performance. In theory, it is supposed to be a bearish reversal but it actually is a bullish continuation pattern 59% of the time. The best performance that it can muster is after a downward breakout in a bear market. Price drops an average of 3.60% in 10 days, ranking it 59 for performance. That is just mid list. Outstanding performance would be a move of 6% or more.

Hanging Man Identification Guidelines

Number of candle linesOne.
Price trend leading to the patternUpward
ConfigurationLook for a small bodied candle atop a long lower shadow in an uptrend.
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Hanging Man: Three Trading Tidbits

If you want a few bones from my Encyclopedia of candlestick charts book, here are three to chew on. The pages refer to the book where the tips appear.

  1. Hanging man candles that appear within a third of the yearly low perform best -- page 368.
  2. Hanging man candles taller than the median show price that moves 50% farther after the breakout than those shorter than the median -- page 368.
  3. Hanging man candlesticks within a third of the yearly high tend to act as continuations of the primary price trend -- page 370.

Hanging Man Example

The hanging man candlestick on the daily scale

The candlestick at A is a hanging man. Price opens near the high, drops much lower, and then claws its way back toward the high. In this case, the hanging man is a white bodied candle, but candle color is unimportant. The hanging man appears in an upward price trend, as required, only price breaks out downward in this example. Price tumbles. This hanging man performs as a reversal of the existing uptrend.

A downward breakout is not unusual since an upward breakout only occurs 59% of the time. I consider that almost random. With price closing so near the top of the candle, an upward breakout (a close above the top of the candle) should be expected anyway.

-- Thomas Bulkowski


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Written by and copyright © 2005-2018 by Thomas N. Bulkowski. All rights reserved. Disclaimer: You alone are responsible for your investment decisions. See Privacy/Disclaimer for more information. Is it time for your medication or mine?