In a Hammer, during a downtrend, there is an initial sharp sell off to new lows. However, by the
end of the day, the market rallies to close at or near its high for the day.



The sharp recovery suggests that the bearish sentiment may be beginning to wane and if a move
above the high of the Hammer days occurs during the next day's trading there is a stronger risk of
complete trend reversal.

In a Hanging man, during an uptrend there is a sharp sell off after the market. By the end of the
day, the market rallies to close at or near the high for the day.

This pattern definitely requires confirmation. The recovery in price over the day could mean the
bulls are still in control. However, a break to new highs on the next trading day is required to
confirm. Alternately, a decline to test the low of the Hanging Man day will suggest a trend reversal