InvertedHammer

Description

The Inverted Hammer pattern is a bullish reversal pattern, so downward trend identification is crucial.

Ideally, an Inverted Hammer gaps down from the previous bar, though the presence of this gap is not required.

Formula

InvertedHammer(INPUT, Stringency=5, LRRange=10, LRType=3, LowerShadowPercentage=15)=begin

  retval = NONUM

  targetBar = 0

  cOpen = GetPrice($1, BATE_OPEN, targetBar, 0)

  pClose = GetPrice($1, BATE_CLOSE, targetBar + 1, 0)

  pOpen = GetPrice($1, BATE_OPEN, targetBar + 1, 0)

  pLow = GetPrice($1, BATE_LOW, targetBar + 1, 0)

  lShadow = LowerShadow($1, targetBar)

  if UpperShadow($1, targetBar) >= (2 * RealBody($1, targetBar)) then begin

    if RealBodyHigh($1, targetBar) < BodyMidPoint($1, targetBar) then begin

      if cOpen <= RealBodyLow($1, (targetBar + 1)) then begin

        if lShadow <= LowerShadowPercentage then begin

          if Stringency >= 5 then retval = '5'|clr_green|below|vertical|arrow|ftiny

          if NewLow($1, targetBar) then begin

            if Stringency >= 4 then retval = '4'|clr_green|below|vertical|arrow|ftiny

            if Bearish($1, targetBar, LRRange, LRType) == TRUE then begin

              if Stringency >= 3 then retval = '3'|clr_green|below|vertical|arrow|ftiny

              if lShadow == 0 then begin

                if Stringency >= 2 then retval = '2'|clr_green|below|vertical|arrow|ftiny

                if cOpen < pLow then begin

                  retval = 'Inv Hammer'|clr_black|below|vertical|arrow|ftiny

                end

              end

            end

          end

        end

      end

    end

  end

  retval

end

Parameters

INPUT

The INPUT directive makes this formula available as a Formula Overlay. INPUT refers to the instrument in the chart.

Stringency

The Stringency argument is used by nearly all candlestick overlays. It controls how many tests must pass in the evaluation of an Inverted Hammer. The lower the number, the more strict the interpretation.

The Stringency argument is an overlay parameter. You can adjust it using the Parameters dialog. The default is 5.

LRRange

The InvertedHammer overlay uses the LR() function with either a continuous or quadratic calculation to determine how the market is trending. The LRRange (Linear Regression Range) parameter is the number of points in the Linear Regression calculation. The default is 10.

LRType

The LRType parameter has two possible settings: 2 and 3, or continuous linear regression and quadratic linear regression, respectively. The default is 3, or quadratic.

LowerShadowPercentage

The LowerShadowPercentage parameter represents a percentage. This parameter serves as the basis for determining whether how long a hammer's lower shadow can be. The smaller the value the more stringent the test. The default is 15, or fifteen percent.

Return Value

The return value is a string plot and varies depending on the value of the Stringency parameter.  The lower the number, the stronger the pattern.

Bullish indicators are rendered in green below the candlestick.

The string plot for a fully qualified Inverted Hammer is "Inv Hammer" rendered in black below the candlestick.

Examples

Comments

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