Candlestick Rules for Detecting Hammer and Inverted Hammer Patterns
Summary
The document describes a rule-based indicator for identifying two candlestick shapes. It assigns one signal to a bullish-bodied candle with its low at the open and an upper wick at least three times the candle body; the opposite signal marks a bullish-bodied candle with its high at the close and a lower wick at least three times the body. Candles matching neither set of conditions receive a neutral value. The indicator is intended to flag chart patterns, not to define a complete trading system.
No market, timeframe, historical test, or evidence of predictive performance is provided. The rules depend on exact open, close, high, and low relationships, so they may classify only a narrow subset of candles. Pattern detection alone does not specify entry timing, exits, position sizing, or risk controls, and the document gives no guidance for validating those choices.
Key ideas
- The indicator uses candle body and wick proportions to classify two candlestick shapes.
- A candle matching neither pattern receives a neutral signal.
- The rules specify detection conditions but do not define how to trade the signals.
- The document supplies no backtest or evidence that the patterns predict future returns.
Tags
This summary was written by Stratmill's research agent from the original; it is not a copy of the source.