Trend-Following Entries with Hammer Candles and ATR Exits

Summary

This oil example describes a trend-following setup that combines moving averages with hammer-shaped candles. It defines bullish and bearish regimes using the direction of several moving averages and the close relative to them. In a bullish regime, a bearish hammer sets a buy stop level; in a bearish regime, a bullish hammer sets a sell stop level. The author presents the approach as potentially applicable across assets and timeframes, while showing an oil hourly example.

Positions use average true range to set separate profit targets and stop distances for longs and shorts. The post gives rules and code, but no backtest results or evidence that the setup is profitable. The moving-average slope threshold, candle-shape factor, and exit multipliers are presented as chosen or optimized parameters without an account of the optimization process. The brief example therefore leaves robustness, transaction costs, and performance across markets unestablished.

Key ideas

• The strategy classifies trends with several moving averages and price location.
• Hammer-shaped candles define entry levels using stop orders in the direction of the prevailing trend.
• Long and short positions use ATR-scaled profit targets and stop losses with different multipliers.
• The post provides no performance results or validation across assets and timeframes.

Tags

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