Hammer Reversal Signals Filtered by a 50-Period EMA
Summary
This strategy identifies bullish hammer candles after a short sequence of falling closes and bearish inverted hammers after rising closes. It defines each shape by wick lengths relative to the candle body, then filters long signals to closes above a 50-period EMA and short signals to closes below it. Stops and profit targets are expressed as fixed multiples of the market tick size; the listed defaults are one tick for the stop and ten for the target.
The document describes the rules and gives an ETH futures backtest period, but reports no outcome or performance statistics. Its risk discussion notes that fixed tick distances may fail as volatility changes, the EMA can lag, and reversal entries can trade against broader trends. It proposes volume and higher-timeframe confirmation, ATR-based exits, and other filters. The source provides concrete definitions, though the very tight default stop may be sensitive to instrument tick size and execution conditions.
Key ideas
- Hammer shapes are defined by wick-to-body proportions and recent price direction.
- A 50-period EMA filters long and short reversal signals by price location.
- Stops and targets use fixed tick distances, with defaults of one and ten ticks.
- The document flags EMA lag, counter-trend exposure, and volatility-sensitive stops.
- A backtest interval is supplied without performance results.
Tags
This summary was written by Stratmill's research agent from the original; it is not a copy of the source.