Secondly, the price level of 94.76 is an unfilled down gap from 22/09/2003.
The US Dollar has enjoyed a rally for quite some months, to the point that USD long position has become a boring proposition. So we're looking for a change of trend.
Best course of action is to wait for this week's to close for confirmation or look for pattern for an earlier confirmation.
"DEFINITION OF 'HANGING MAN'
A bearish candlestick pattern that forms at the end of an uptrend. It is created when there is a significant sell-off near the market open, but buyers are able to push this stock back up so that it closes at or near the opening price. Generally the large sell-off is seen as an early indication that the bulls (buyers) are losing control and demand for the asset is waning. "
If this pattern is found at the end of a downtrend, it is known as a "hammer".
Here's a NASDAQ monthly hanging man. At least it made me a good bit of money in January. HM at a key resistance level.
1 - from what I've seen until now, inexperienced traders buy breakouts, and whenever a decline occurs, they think it is the end of the trend. They do not tend to jump on corrections (if they would, they would make money in the markets, most certainly). This is a personal opinion.
2 - secondly, if you go in the depth of the candle, it means that at a certain point in time (this is a weekly chart, I will use it as an example), lets say on Tuesday, people were bearish on the dollar, but then by the end of the week, the bearishness vanished and professionals closed the week near the open. This is absorption. The selling pressure has been absorbed, short positions have been taken out due to the rally at the end of the week, weak longs have been shaken out by the fall at the beginning of the week. Something being bearish for some time and then at the end of the week turning bullish... that is not bearish to me.
Of course this doesn't happen all the time, and I wouldn't use a monthly chart as a starting point for a study. The month is too long, many things can happen. I for one, use the monthly chart only to look where price stands in comparison with the past years. I do not use any technical analysis on it (looking at a chart is technical analysis and all that nonsense that someone would say just to prove how wrong I am.... you got my point).
There is a concept very unfamiliar to so many people, and that is absorption. I recommend to read David Weis' book, which is a modern adaptation to the Wyckoff method. Wyckoff was the first to introduce the concept of absorption. The first sign of absorption is the hanging man candlestick.
Now you guys provided some chart examples. The problem with that is that both of you look at the top for hanging man candlesticks. I encourage you to scroll back a bit, and highlight all the hanging man candlesticks on the chart, that means the ones that didn't play out by the book should be in there too. Also jangseohee, you should study the difference between a hanging man and a hammer, because you got them wrong. Some candles you highlighted took place after bearish candles, and although it can't be called a downtrend, a candle like that after a bearish candle is more of a hammer rather than a hanging man. However, no matter how you call it, it is bullish.