Hammer Pattern Forex Candlestick Strategy combines MT4 indicators with a template. This forex strategy aims to transform historical data and trading signals. The Hammer Pattern Forex Candlestick Strategy allows you to spot patterns and peculiarities in price dynamics that are not visible to the naked eye.
So that we can identify the pattern, it is important to understand the characteristics of the Hammer pattern.
Hammer is: The lower wick (the Tail) is approximately twice as big as the body and upper wick, and is located at the major support.
- The wick's upper end is at least twice the size of the body.
- It can be found at the major resistance.
- This system can be used on both a 15-minute or 4-hour timeframe. For trading within a 4-hour timeframe, daily pivot points will be used. Weekly pivot points will be used for trading.
Currency Pair: any
Timeframe: 1-hour chart and above
Trading Session: any
How to trade with Hammer Pattern Forex Candlestick Strategy?
Buy Entry Signals
- Price must not exceed 20-period Exponential moving average (EMA20).
- EMA20 must not be lower than 50-period Exponential moving average (EMA50).
- Price moved past a pivot level (S1/S2/S3/P/R1/R2/R3) and retraced back on the exponentials moving averages (Time Frame 15 min 4H Time Frame retrace back also Weekly pivot points level).
- A hammer formed.
- We enter the market at the price of three lots after we have closed the hammer candlestick.
- Based on the volatility of the currency pair we are trading, stop loss should be set 10-20 pips lower than the Low of the Hammer.
- We take out one lot if the price moves in our favour by the same distance that our stop loss. If our stop loss is 50 pip away from the entry price, we take one lot out.
- When we make 50 pips, we can sell one lot.
- We trail our stop loss a few pips below EMA20 for the other two lots. We let our profits run, and let the market decide when we close our positions.
To sell entry
- These rules are clearly the opposite of those for long (buy) signals.
How to download and install an indicator?
In order to install the indicator on your MT4 platform, you need to follow these steps:
- Click on “Download Indicator” button located at the bottom of the post.
- Save the file to your computer.
- Extract and move the files into MT4>Indicator folder of the MetaTrader4 software file directory.
- Restart your Metatrader platform.
- Navigate to “Indicators.”
- And select “Hammer Pattern Forex Candlestick Strategy” template to apply it on the chart.
Note: This indicator was developed by T. Morris. AtoZ Markets does not carry any copyrights over this trading tool.