Hammer and Hanging Man

A hammer and a hanging man are the same candlestick shape — a small body positioned near the top of the candle's range, with a long lower wick at least roughly twice the body's length and little to no upper wick — distinguished entirely by the context in which they appear. When this shape forms after a sustained downtrend, it's called a hammer and interpreted as a bullish reversal signal, suggesting sellers pushed price sharply lower during the period but buyers stepped in forcefully enough to push it back up near the open by the close.

When the identical shape forms after a sustained uptrend instead, it's called a hanging man and interpreted as a bearish warning sign, suggesting that despite the uptrend, sellers were able to push price sharply lower at some point during the period before buyers recovered it — a sign that selling pressure may be building beneath the surface of an otherwise still-rising trend. Neither pattern is generally treated as confirmed until the following candle or candles support the suggested reversal direction with further price movement.