Hanging Man and Doji Patterns in Focus!XAUUSD
2H Chart
Price: 2622.23
Hanging Man:
The highlighted candle in the chart represents a Hanging Man pattern, which is a bearish reversal pattern typically found at the top of an uptrend.
The long lower wick signifies that sellers pushed the price down during the session, but buyers managed to bring it back up close to the open price, though not with strong bullish conviction.
The fact that this pattern appears after a sharp upward move signals a potential bearish reversal, especially if followed by a bearish confirmation candle.
Doji:
The Doji signals indecision, with buyers and sellers unable to gain control as the open and close prices are nearly the same. Following the Hanging Man and with an overbought RSI of 73.32, it suggests weakening bullish momentum and potential for a bearish reversal.
Place a stop loss above the Hanging Man’s high and set take profit near the next key support at 2,613.732. These levels are derived from the Hanging Man, providing some bearish confirmation. However, traders should feel free to skip the trade if they aren’t confident with the setup, as prioritising risk management is crucial.
Confirmation:
A bearish candle closing below the low of the Doji would provide strong confirmation of a trend reversal.
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