Bearish Candlestick Patterns:Hanging Man & Three Black Crows

The Hanging Man and Three Black Crows candlestick patterns are commonly seen in stock market analysis, but they are equally applicable to forex market technical analysis.

Due to the volatility and global nature of the forex market, these patterns provide traders with important tools for identifying potential price reversal points, helping them make more precise trading decisions across a wide range of currency pairs.

This article aims to delve into how these two candlestick patterns can be applied in technical analysis, assisting traders in identifying potential market peaks and optimizing trading strategies to capitalize on every market turn, allowing traders to steadily navigate the complex and fluctuating financial markets.

Bearish Candlestick Patterns:

• Hanging Man
• Three Black Crows

Hanging Man

The Hanging Man pattern is almost identical to the Hammer candlestick, with the key difference being that the Hammer often appears during a downtrend, while the Hanging Man appears at the end of an uptrend.

The Hanging Man represents indecision and uncertainty in the market after a period of rising prices. The long lower shadow indicates that, although the price was pushed lower during the session, the close is near the open, suggesting that buyers were unable to maintain the upward momentum.

This is a potential signal of a bearish reversal, implying that sellers are beginning to gain control.

Hanging Man Characteristics:

• Appears after an uptrend.
• The candlestick has a small body near the top of the price range, with a long lower shadow and a short or nonexistent upper shadow.
• The candlestick can be either bullish or bearish.

Three Black Crows

The Three Black Crows pattern is characterized by three consecutive bullish candlesticks, where each candlestick closes lower than the previous one. This is why the pattern is referred to as "Three Black Crows."

It signals a clear shift in market sentiment, from buyer dominance to seller dominance, and is a strong indication of a bearish trend.

This pattern typically suggests a medium- to long-term trend reversal, rather than a short-term fluctuation.

Three Black Crows Characteristics:

• Composed of three consecutive candlesticks of similar length, with each candlestick closing lower than the previous one.
• Appears after an uptrend.

Conclusion

The Hanging Man and Three Black Crows candlestick patterns provide clear warning signals of bearish trends in markets such as forex and stocks.

By recognizing these key signals, investors can identify market turning points in a timely manner, optimize their trading decisions, and stay ahead in volatile markets.

Combining these patterns with other analysis tools (such as volume and moving averages) can further enhance the accuracy of trend recognition.