Hanging Man: the hammer shape as a warning, not a reversal

What it measures

A hanging man has the exact shape of a hammer — small body near the top of the range, long lower wick, minimal upper wick — but appears after an advance rather than a decline.

It measures the same intrabar sell-off-and-recovery as a hammer, in a context where it is read as a warning instead of a reversal signal.

How it is calculated

These are the steps Basis performs, verified against the published definition.

1. 1

   Body in the upper portion of the range.

2. 2

   Lower wick at least roughly double the body.

3. 3

   Minimal upper wick.

4. 4

   Occurs after an existing uptrend, which is what makes it a hanging man rather than a hammer.

How to read it

• The long lower wick shows sellers were able to push price down hard intrabar for the first time in the move — a change in character worth noting even though buyers recovered by the close.
• A confirmed hanging man — followed by a lower close the next bar — carries more weight than the single bar alone.
• The pattern is a warning to tighten risk on existing longs more than it is a signal to open a new short — it flags that control may be shifting, not that it already has.
• A hanging man at a fresh high after an extended run carries more weight than the same shape appearing mid-trend with no obvious resistance nearby to explain the sudden lower wick.

Where it misleads

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