Hammer and hanging man

The shape

• Small body near the top of the range (colour matters little).
• Lower wick at least twice the body.
• Little or no upper wick.

Same shape, opposite meaning

After a decline it is a hammer: sellers drove price well down, then buyers took it all back — the market is "hammering out" a bottom. After a rally the identical candle is a hanging man: the long lower wick shows that heavy selling appeared at some point, even though price recovered. The hanging man needs confirmation more than the hammer does — a close below its body the next candle.

What makes a better one

• A longer lower wick (3× the body or more) and almost no upper wick.
• At a support level or a prior low — even better if the wick sweeps just below that low and closes back above (a stop run).
• Larger than recent candles: it took real volume to reject that low.

Trading it

Entry: after confirmation (a close above the hammer's high is strict; above its body is common). Stop: below the hammer's low — it is the low the buyers defended. Failure: a close below that low. Target: the next resistance, and only if it gives 1.5–2R.