The Hanging man
It is called a Hanging Man if a paper umbrella appears at the top end of a trend. It indicates a market high. This formation suggests strong sell pressure.
The colour of the hanging man does not matter as long as it has the correct ‘shadow to real body’ ratio. It is imperative that there was an uptrend beforehand, which is demonstrated by the curved line in the illustration. The idea behind the formation of a hanging man is this:
As such, the dangling man implies that shorting the stock would be wise. This would involve executing a trade as follows:
After the short has been initiated, the candle’s peak provides an appropriate stoploss for trade.