ATR-Filtered Hammer and Shooting Star Reversal Strategy
Summary
This strategy combines Hammer and Shooting Star candlestick patterns with an Average True Range filter. It defines each pattern using the relative lengths of candle bodies and wicks, and requires the candle’s total range to exceed an ATR-based threshold. A bullish pattern is intended to trigger a long entry, while a bearish pattern triggers a short. Stops are placed beyond the signal candle’s low or high using an ATR multiple, with profit targets set using another ATR multiple.
The document describes a TradingView implementation and lists a daily ETH/USDT futures backtest interval, but supplies no performance statistics or trade outcomes. It also identifies risks including false reversals, parameter sensitivity, trend conditions, and delayed confirmation at candle close. Its suggestions for trend filters, higher timeframe confirmation, volume checks, and adaptive sizing are proposed extensions, not tested results. The strategy’s rules therefore offer a framework to evaluate, rather than evidence that the approach is profitable or robust.
Key ideas
- The system identifies Hammer and Shooting Star candles using body, wick, and range criteria.
- An ATR threshold filters patterns, while candle direction is used as confirmation.
- Long and short trades use ATR-based stop loss and take profit levels.
- The published daily futures backtest settings do not include performance results.
- False signals, trend conditions, confirmation delay, and parameter sensitivity are stated limitations.
Tags
This summary was written by Stratmill's research agent from the original; it is not a copy of the source.