Hammers, Bollinger Bands & Moving Average Exponential

The Hammers, Bollinger Bands & Moving Average Exponential indicator provides a multi-layered technical analysis toolkit by combining automated hammer candlestick detection with volatility bands and trend-following moving averages into a single overlay.

Usage

The Usage section describes how the script can be used to identify potential trend reversals and volatility expansions. Traders can use this tool to spot Hammer and Inverted Hammer patterns in the context of broader market trends and volatility levels.

• Hammer Detection: The script automatically plots shapes above or below candles that meet specific hammer criteria. An Up Hammer (typically occurring at the bottom of a downtrend) is marked above the bar, while a Down Hammer (inverted hammer or shooting star) is marked below.
• Trend Filtering: The Exponential Moving Average (EMA) serves as a baseline for trend direction. Traders may look for Up Hammers when price is above the EMA or Down Hammers when price is below it to align with the prevailing momentum.
• Volatility Context: The Bollinger Bands provide dynamic support and resistance levels. A hammer pattern forming near the lower Bollinger Band often suggests a potential bullish reversal, while one near the upper band may signal a bearish exhaustion point.

Details

The script identifies hammer patterns based on the proportional relationship between the candle body and its wicks. A candle is classified as a hammer if the body occupies a small percentage of the total range and one wick is significantly longer than the other.

To ensure the patterns are significant, the script incorporates a dynamic volatility filter. It calculates a minimum candle size based on the high-low range of the last 20 to 50 bars. This prevents the indicator from labeling insignificant "doji-like" candles in low-volatility environments as hammers. The Bollinger Bands are calculated using a standard Simple Moving Average (SMA) basis and Standard Deviation, while the EMA provides a faster response to recent price changes.

Settings

Bollinger Bands

• Show Bollinger Bands: Toggles the visibility of the Bollinger Bands basis, upper/lower bands, and background fill.
• Length: Sets the period for the SMA basis and Standard Deviation calculation.
• Source: Determines the price data used for calculations (e.g., Close, Open, High, Low).
• StdDev: Adjusts the multiplier for the Standard Deviation to widen or narrow the bands.

Moving Average Exponential

• Show Moving Average Exponential: Toggles the visibility of the EMA line.
• Length: Sets the period for the Exponential Moving Average calculation.
• Source: Determines the price data used for the EMA calculation.

Hammers

• Show Hammers: Toggles the visibility of the triangle shapes that mark detected hammer candles.

FAQ

How are the hammer patterns calculated? The script evaluates the ratio of the candle body to the total range and ensures the wick is at least twice the size of the body, while also checking if the candle meets a minimum size threshold relative to recent price action.

Can I use this indicator for alerts? Yes, the script includes built-in alert conditions that trigger whenever an Up Hammer or Down Hammer is detected at the close of a bar.

How do I access the Hammers, Bollinger Bands & Moving Average Exponential tool? You can get access on the LuxAlgo Library for charting platforms like TradingView, MetaTrader (MT4/MT5), and NinjaTrader for free.