Inverted Hammer Detection with Configurable Candle Filters

Summary

This indicator identifies candidate inverted hammer candles using configurable shape and context filters. It compares the upper and lower wicks with the candle body, requires the body to meet a minimum share of the candle range, and can restrict signals to candles closing above the prior close or reaching above the prior high. A close below a selected exponential moving average can also serve as a downtrend condition; setting the threshold to zero disables that filter.

Detected candles are marked on the chart, and the example strategy enters long when a signal occurs. The document provides a BTC/USDT futures backtest configuration, but no results or evidence that the pattern predicts reversals. The filters describe a candle pattern rather than a validated trading edge, and the supplied material does not specify exits, position sizing, or risk management.

Key ideas

• The indicator detects long upper wicks relative to the candle body, with limits on the lower wick.
• A minimum body-to-range threshold and optional close-direction and prior-high conditions filter signals.
• A configurable EMA condition can require the signal candle to appear below the average.
• The example enters long on a detected candle but provides no reported backtest performance or exit plan.

Tags

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