Hammer & Hanging Man

Overview

The Hammer and the Hanging Man share exactly the same shape: a small body sitting near the top of the candle, a long lower shadow at least twice the body's length, and little or no upper shadow. Japanese tradition calls this single-candle figure the karakasa — the paper umbrella.

Two names exist because the figure means opposite things depending on where it appears. At the bottom of a downtrend it is a Hammer, hinting at a bullish reversal. At the top of an uptrend it is a Hanging Man, warning of a bearish one. Same glyph, different story — the textbook example of why candlestick reading is inseparable from context.