Cryptocurrency trading has become so evolved that almost all the principles of finance, especially the ones related to stock trading, have taken into coverage the cryptocurrency trade as well. Hanging Man Candlestick pattern is one such axiom, which originated from stocks (the Japanese rice merchants), and now has extended to cryptocurrency arbitrage as well. Read below to find out what the Hanging Man Candlestick pattern is.
What Is the Candlestick Pattern
Candlestick is a kind of price chart that is meant to display the high and low, and the opening and closing prices of some particular cryptocurrency, pertaining to a specific duration of time. There are usually multiple candlesticks studied together, to forecast the resultant pattern, to be indicative of a bullish or a bearish market. There can be many resultant patterns, like the Hanging Man Candlestick pattern, the stick sandwich pattern, the evening star pattern and so on.
How to Read: What is the Hanging Man Candlestick Pattern
The wide part of the candlestick is coined as the “real body” and is used to determine the position of the closing price with respect to the opening price in that specific time duration. It is color coded, and is usually white or green if the crypto closes higher comparatively, and black or red if the crypto closes lower comparatively, based on the opening price. The shadow of this candlestick is used to study the maximum and minimum prices, that is the high and low for that time, and they can also be compared to the opening and closing prices from here. The shape of the candlestick is also very good in relation to the inter-relation between all these four prices in a specific time frame, i.e., opening price, closing price, highest price and lowest price. Cryptocurrency traders use candlestick patterns to determine bullish or bearish trends in a market, and their respective severity, to make cryptocurrency trading decisions.
In the case of a Hanging Man Candlestick pattern, the candlestick shape is such that it indicates that prices can now fall, as there has been a significant uptrend already. The shadow in this case tends to be longer, and the real body is shorter. The upper shadow is almost negligible and sometimes missing altogether.
Reasoning a Hanging Man Candlestick Pattern
Most investors would make simple assumptions from what is the Hanging Man Candlestick pattern, like some would conclude that it is warning that prices would move lower on the next candle, while some would conclude the Hanging Man Candlestick shadow to be hinted that traders were able to take control for part of the trading period. However, in-order to draw conclusions beyond these simple ones and make meaningful cryptocurrency trading strategies based on these Hanging Man Candlestick patterns, we can always hire services from expert consultants like executium.com. They can make advanced conclusions by studying many Hanging Man Candlestick patterns, and by overlapping them with other trading tools, so as to come up with a better and more comprehensive view of the market scenario.