Identifying Hammer and Inverted-Hammer Candlesticks

Summary

This document describes a candlestick indicator that marks hammer-shaped and inverted-hammer-shaped candles. It classifies the two forms by the position of the candle body within its range: the body is in the upper or lower half. The indicator uses blue for hammer-type candles and red for inverted hammers, then varies the shade according to whether the tail and closing price lie on different sides or the same side of the candle.

The description explains a visual classification scheme, but it does not specify exact mathematical thresholds for identifying the candle shapes or provide rules for trading them. There are no examples of subsequent price behavior, performance tests, or discussion of market context. As a result, the document is useful as a basic explanation of what the indicator highlights, not as evidence that these formations predict reversals or support a profitable strategy. Users would need to verify the detection rules and test any interpretation across instruments and timeframes.

Key ideas

• The indicator marks hammer and inverted-hammer candle forms.
• It distinguishes the forms by whether the body occupies the upper or lower half of the candle.
• Hammer forms are blue and inverted hammers are red.
• Shade intensity depends on the relative placement of the tail and closing price.
• The document gives no precise detection thresholds or evidence of predictive performance.

Tags

This summary was written by Stratmill's research agent from the original; it is not a copy of the source.