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1. INTRODUCTION

HammerTradingSystem 1.00

Bullish Reversal and Bearish Warning at Pattern Turning Factors

Writer: Ich Khiem Nguyen | MQL5: https://www.mql5.com/en/customers/khiemni/vendor

What’s HammerTradingSystem?

HammerTradingSystem detects Hammer and Hanging Man candlestick patterns in your MetaTrader 5 charts mechanically. The indicator checks each accomplished bar, evaluates it towards six structural gates, scores surviving patterns with a weighted high quality system, and shows solely the setups that clear your minimal high quality threshold. Entry ranges, cease losses, and take revenue targets are drawn instantly on the chart so you’ll be able to concentrate on the commerce determination quite than the calculation.

What Are Hammer and Hanging Man Patterns?

The Hammer and Hanging Man share the identical single-candle form: a small physique sitting close to the highest of the candle vary, a protracted decrease shadow extending effectively under the physique, and little to no higher shadow. The distinction between them is context — the place in a development this form seems determines which sign it sends.

Bullish Hammer (Reversal Sign)

Seems after a downtrend. Sellers push value sharply decrease throughout the session, however patrons step in and drive the shut again up close to the open, leaving a protracted decrease shadow as proof of rejected promoting stress. When this form types after at the very least two declining bars, the indicator classifies it as a Hammer — a possible bullish reversal sign. The longer the decrease shadow relative to the candle vary, the stronger the customer dedication implied by the sample.

Bearish Hanging Man (Warning Sign)

The identical form showing after an uptrend tells a unique story. Worth has been rising, and the lengthy decrease shadow exhibits that sellers tried to push value down throughout the session — patrons recovered by the shut, however the try itself is a warning. Bulkowski’s analysis locations the Hanging Man at rank 87 out of 103 patterns with a 59% continuation fee, that means it extra typically continues the uptrend than reverses it. HammerTradingSystem treats it as a bearish warning quite than a confirmed reversal, getting into through Promote Cease solely after value breaks under the sample low.

Pattern Context Detection

The indicator examines the three bars instantly earlier than every candidate candle. If at the very least two of these three bars are declining (decrease closes), the sample is classed as a Hammer. If at the very least two of the three are rising (increased closes), it turns into a Hanging Man. When the context is ambiguous — neither development reaching the two-bar threshold — the indicator defaults to Hammer classification, reflecting the sample’s extra widespread bullish software.

How the Indicator Finds Patterns

The indicator evaluates every accomplished bar towards six sequential gates. All six should go for a sign to be generated.

1. Decrease shadow gate: The decrease shadow should occupy at the very least the minimal required fraction of the full candle vary (Normal: 35%, Strict: 45%). This confirms that significant promoting stress was rejected throughout the session.

2. Physique place gate: The midpoint of the physique should sit at or above the minimal place threshold throughout the candle vary (Normal: 50%, Strict: 60%). A physique clustered close to the high quality is the defining attribute of the Hammer form.

3. Higher shadow gate: The higher shadow should stay under the utmost allowed ratio of whole vary (Normal: 15%, Strict: 10%). A big higher shadow would point out purchaser rejection from above, which conflicts with the bullish reversal story.

4. Vary significance gate: The whole candle vary should equal or exceed the minimal a number of of ATR (Normal: 0.40×, Strict: 0.50×). This rejects tiny candles that type throughout low-volatility consolidation and carry little structural that means.

5. Shadow-to-body ratio gate: The decrease shadow have to be at the very least twice the physique peak (Nison criterion). This ensures the lengthy decrease shadow isn’t merely a end result of a big physique quite than real rejection.

6. Doji exclusion gate: The physique have to be at the very least 0.02× ATR. A near-zero physique would make this a Dragonfly Doji quite than a Hammer — the 2 patterns are structurally associated however analytically distinct.

Solely candles passing all six gates proceed to high quality scoring and sign registration.

High quality Rating — Evaluating Sample Energy

Each sample that clears detection receives a high quality rating between 0.00 and 1.00. Six elements contribute to this rating, every weighted by its significance to the sample’s structural integrity.

High quality Components

QF-3 and QF-5 are inverted elements: for QF-3, a smaller higher shadow produces a better rating; for QF-5, a detailed within the decrease portion of the earlier candle’s vary (indicating downtrend context) produces a better rating.

Rating Grades

• Grade A (0.80 – 1.00) — Glorious: Sturdy structural alignment throughout all six elements
• Grade B (0.60 – 0.79) — Good: Dependable setups with most elements scoring effectively
• Grade C (0.40 – 0.59) — Common: Legitimate construction however weaker issue scores; use with extra affirmation
• Grade D (0.20 – 0.39) — Beneath Common: Marginal setup; increased false sign danger
• Grade F (0.00 – 0.19) — Poor: Keep away from buying and selling these indicators

High quality Threshold

The default minimal high quality is 0.30. You possibly can elevate this to filter for higher-conviction setups:

• 0.50 – 0.60: Exhibits solely the clearest patterns with robust shadow proportions and physique positioning — fewer indicators, increased per-signal high quality
• 0.20 – 0.30: Exhibits extra indicators together with weaker structural examples — helpful for learning the sample or buying and selling extremely liquid markets
• Tip: Run the indicator on the default 0.30 in your most well-liked image and timeframe for a couple of weeks earlier than adjusting the brink

What You See on the Chart

When a Hammer or Hanging Man sample is detected and passes all filters, the indicator attracts the next parts:

Sign Markers

• Arrow icons: Blue upward arrows mark Hammer (bullish) patterns; orange downward arrows mark Hanging Man (bearish) patterns. Grey arrows point out indicators blocked by an lively filter such because the Reverse Sign filter.
• High quality labels: A numeric rating (e.g., “0.68”) seems close to every sign, displaying how the sample ranked throughout all six high quality elements

Buying and selling Strains

• Entry line: An orange horizontal line on the pending order stage — Purchase Cease above the sample excessive (+ 0.05×ATR) for Hammers, or Promote Cease under the sample low (- 0.05×ATR) for Hanging Males
• Cease Loss line: A purple horizontal line labeled “SL” — positioned under the sample low (- 0.25×ATR) for Hammers, or above the sample excessive (+ 0.25×ATR) for Hanging Males
• Take Revenue strains: As much as 4 inexperienced horizontal strains labeled TP1 by way of TP4, spaced at configurable R:R multiples from the entry stage

Visible Zones

• Sample spotlight: A shaded rectangle spans the hammer candle, making it straightforward to determine which bar triggered the sign. The chance zone between entry and SL is shaded in purple; reward zones between entry and every TP stage are shaded progressively lighter.
• Monitoring dots: Small coloured dots above or under the sign candle replace because the sign state adjustments — white for pending, yellow for lively, inexperienced for goal hit, purple for cease hit

Sign Lifecycle

1. Pending: Sample detected, pending order not but triggered
2. Triggered: Entry value reached, commerce is lively
3. Goal Hit: Worth reached a take revenue stage
4. Cease Hit: Worth reached the cease loss
5. Cancelled: Sign invalidated earlier than entry (reversed path or bar closed towards)

Settings You Can Regulate

Detection Parameters

Detection Preset Values

Customized Threshold Parameters

Settings Ideas

• Start with default settings and observe a number of dozen indicators in your chosen image and timeframe earlier than making changes
• If the Normal preset produces too many indicators, change to Strict or elevate Min High quality to 0.50
• If Strict produces too few indicators, return to Normal and contemplate elevating the standard threshold as an alternative of loosening the detection gates
• On low-volatility devices, the Min Vary/ATR gate at 0.40 could also be adequate; on high-volatility devices like XAUUSD, contemplate elevating it to 0.50 so small insignificant candles are excluded
• The SL Buffer of 0.25×ATR is wider than some comparable patterns as a result of Hammer lows often get retested earlier than the reversal takes maintain — keep away from reducing this too tight

Finest Timeframes and Markets

Beneficial Timeframes

• M15 — High quality: Medium | Frequency: Excessive | Finest for: Scalpers who need intraday Hammer indicators at session open and shut intervals
• H1 — High quality: Excessive | Frequency: Medium | Finest for: Day merchants in search of clear reversal setups at intraday assist and resistance ranges
• H4 — High quality: Excessive | Frequency: Decrease | Finest for: Swing merchants who need well-formed Hammer patterns with increased follow-through potential
• D1 — High quality: Highest | Frequency: Low | Finest for: Place merchants in search of textbook Hammer indicators at main every day assist ranges

Finest Markets

• XAUUSD (Gold): Hammer patterns at assist ranges on H1 and H4 incessantly mark intraday reversal factors, significantly throughout London and New York session overlaps
• Main foreign exchange pairs (EURUSD, GBPUSD, USDJPY): Stable Hammer indicators type on H1 and H4, particularly close to spherical numbers, every day pivots, and prior session highs/lows
• Indices (US30, NAS100): Each Hammer and Hanging Man formations seem at structural turning factors on H1 and H4; Hanging Man indicators at prior resistance highs will be significantly informative
• Oil (USOIL): Hammer patterns type at assist ranges after sharp selloffs — finest noticed on H1 and H4

The indicator works on any image and timeframe. The combos listed above have a tendency to provide patterns with stronger structural high quality scores.

Getting Began — Fast Setup

1. Open MetaTrader 5 and cargo a chart (XAUUSD on H1 or H4 is an effective place to begin)
2. Within the Navigator panel (Ctrl+N), develop Indicators → Customized and find HammerTradingSystem
3. Drag the indicator onto the chart
4. Within the settings dialog, choose your Detection Preset (Normal beneficial for first use) and click on OK — the indicator will scan historical past and show detected patterns instantly
5. Observe the indicators that seem: blue upward arrows point out Hammer (bullish) indicators; orange downward arrows point out Hanging Man (bearish) indicators
6. Verify the standard rating label on every sign to gauge structural energy — concentrate on patterns scoring 0.50 or increased when beginning out
7. Non-obligatory: Allow alerts within the ALERTS part to obtain popup or push notifications for brand new patterns as they type in real-time

All Options at a Look

• Computerized Hammer (bullish) and Hanging Man (bearish) single-candle sample detection on any image and timeframe
• 6-gate structural detection: decrease shadow ratio, physique place, higher shadow restrict, vary/ATR, shadow-to-body ratio, Doji exclusion
• 6-factor weighted high quality scoring (decrease shadow 0.35, physique place 0.25, higher shadow inverted 0.15, vary/ATR 0.10, shut vs prior vary inverted 0.10, relative vary 0.05)
• Pattern context detection utilizing 3-bar prior value motion: downCount >= 2 → Hammer, upCount >= 2 → Hanging Man
• 3 detection presets: Normal, Strict, Customized (user-defined thresholds)
• Sign states and lifecycle monitoring (Pending → Lively → Completed)
• High quality filter to suppress weak patterns under threshold
• Excessive zone filter (overbought/oversold rejection)
• Stoploss hunt filter (liquidity sweep validation)
• Reverse sign filter (stop conflicting indicators)
• Threat/Reward with 3 cease loss strategies (Donchian Channel, ATR, Sample)
• As much as 4 take revenue ranges (TP1-TP4) at configurable R:R ratios
• Donchian Channel trailing cease loss
• MTF Scanner (as much as 150 symbols × 8 timeframes)
• Market construction evaluation (BOS / CHOCH)
• 4-channel alert system (popup, sound, push, e mail)
• Sign statistics dashboard
• Skilled chart themes (Darkish, Mild, Customized)
• EA sign buffers for automated buying and selling

For detailed guides on every function, see the MANUAL included with the indicator.

Widespread Questions

Q: What’s the distinction between a Hammer and a Hanging Man?

Each patterns have the identical candle form — small physique close to the high quality with a protracted decrease shadow. The excellence is context: a Hammer types after a downtrend (bullish reversal sign) and a Hanging Man types after an uptrend (bearish warning). HammerTradingSystem determines which sort it’s by checking whether or not the three bars earlier than the sample present at the very least 2 declining or 2 rising closes.

Q: Why is the Hanging Man described as a “warning” quite than a confirmed reversal?

Thomas Bulkowski’s analysis locations the Hanging Man at rank 87 out of 103 candlestick patterns, with value persevering with the prior uptrend 59% of the time after the sample types. This implies a Hanging Man is extra prone to be a short lived pause within the uptrend than a confirmed high. The indicator generates a Promote Cease entry under the sample low — if value by no means breaks that low, the sign expires with out triggering, which naturally filters many false tops.

Q: What’s the distinction between Normal and Strict presets?

Normal makes use of relaxed thresholds (decrease shadow >= 35% of vary, physique place >= 50%, higher shadow <= 15%, vary >= 0.40×ATR) and passes a better proportion of candidate candles. Strict tightens all 4 thresholds (45%, 60%, 10%, 0.50×ATR respectively) and accepts solely probably the most clearly-formed patterns. Begin with Normal and change to Strict in the event you desire fewer however extra textbook-quality indicators.

Q: Why does the SL buffer default to 0.25×ATR quite than a smaller worth?

Hammer lows are frequent targets for cease hunts — value briefly drops under the sample low earlier than reversing upward. A buffer of 0.25×ATR gives sufficient clearance to soak up these temporary excursions with out being so huge that it materially adjustments the chance profile. On markets the place cease hunts are widespread (XAUUSD, main indices), you could contemplate rising this to 0.30×ATR.

Q: What if the context is ambiguous — neither a transparent uptrend nor downtrend?

If fewer than 2 of the three prior bars are declining and fewer than 2 are rising, the indicator classifies the sample as a Hammer (bullish) by default. This displays the Hammer’s extra widespread software within the literature and the truth that bullish reversals on ambiguous context carry a better continuation danger — all the time mix with your personal market construction evaluation in these instances.

Q: How do I scale back the variety of false indicators?

Elevate the Min High quality threshold to 0.50 or increased to see solely stronger patterns. You can too change to the Strict Detection Preset, allow the Route Filter to limit indicators to the dominant development path, or allow the Excessive Zone Filter to dam indicators close to overbought/oversold channel extremes.

What’s New — Model 1.00

That is the 1.00 launch of HammerTradingSystem. Key options embrace:

• Hammer and Hanging Man detection utilizing 6-gate structural validation with Nison shadow-to-body criterion
• 6-factor weighted high quality scoring utilizing decrease shadow dominance, physique positioning, higher shadow absence, vary significance, prior vary context, and relative candle dimension
• Pattern context detection from 3-bar prior value motion to tell apart Hammers from Hanging Males
• Normal and Strict presets, plus totally customizable Customized threshold mode
• 7-layer filter chain (High quality, Excessive Zone, Route, Stoploss Hunt, Sign Zone, Market Construction, Reverse Sign)
• Multi-timeframe scanner masking as much as 150 symbols and eight timeframes concurrently
• Automated Entry/SL/TP ranges with Donchian Channel trailing cease
• 4-channel alert system (popup, sound, push notification, e mail)
• EA sign buffers enabling automated buying and selling techniques to eat Hammer indicators through iCustom()
• Skilled chart themes (Darkish, Mild, Customized) for prolonged buying and selling classes

Getting Assist

If in case you have questions or want assist:

I am dedicated to serving to you get probably the most out of this indicator.

Able to Begin?

HammerTradingSystem is constructed to determine Hammer and Hanging Man patterns mechanically, so you’ll be able to consider evaluating the commerce quite than looking for the setup. Connect the indicator to your chart, begin with the default settings, and observe how the indicators line up with your personal market construction evaluation.

Completely happy buying and selling!

Ich Khiem Nguyen

HammerTradingSystem 1.00 — Created 2026-02-24