A Hanging Man is a type of Japanese candlestick characterized by a small body, minimal or no upper shadow (or wick), and a lower shadow. For the Hanging Man candle to be considered valid, the lower shadow must be at least twice the length of the candle's body, and the body must be positioned at the upper end of the trading range.

This pattern consists of a single candlestick, but it should be surrounded by other candles that support its validity. In essence, the Hanging Man appears during an uptrend, featuring a long lower shadow with a small real body at the top of the range, indicating that the price may have peaked and is susceptible to a downward reversal.

To identify a Hanging Man candlestick pattern, look for the following criteria:

• The lower shadow should be long, at least twice the length of the body.
• There should be no upper shadow (although a very small upper shadow is acceptable).
• It should occur at the upper end of the trading range.
• The color of the body is not crucial, though a black body may indicate more bearish outcomes.
• The price should be in a clear uptrend prior to the formation of the Hanging Man.
• The Hanging Man must be confirmed by the next candle, either with a black candle or a gap down with a lower close.

The Hanging Man candlestick can signal a short trade (bearish perspective) as the long shadow reflects selling pressure. The validity of the Hanging Man is confirmed by the price action following the formation of the candle. If the next candle closes below the low of the Hanging Man candle, this may present a favorable entry point for a short position.