Hello,

Happy Holidays.  I wanted to create an easy scan for hammers with a lookback period of 8 days.  Specifically, I want to be able to scan (for example the S&P 500 or any other watch list) for hammers that appeared on the chart within the past 8 sessions.

This is the formula I found for hammer scanning in one of the other discussions and had some questions.

(H-L)>(3*abs(O-C))AND((C-L)/(.001+(H-L))>0.8)AND(O-L)/((.001+(H-L))>0.8)
*Sort in ascending order*

Criteria I would like:

1. Market in a down trend (not as important as I can determine that from the chart myself, but if needed say 3-5 days.

2. Small real body at or near the top of the range.

3. Lower shadow atleast 2x height of the real body***This is extremely important to me and wanted to see if the formula above achieves this?

Overall, I want to scan for hammers with a look back period and cannot figure out a way to achieve this.  Can you help me???

Thanks.

Justin

I would probably rewrite the formula given as follows to:

H - L > 3 * ABS(O - C) AND C - L > .8 * (H - L) AND O - L > .8 * (H - L)

It simply checks for the total size of the candle to be at least three times the size of the body of for the close and open to both be more than 80% of the way up the candle. No probably don't even need the first part and could get away with:

C - L > .8 * (H - L) AND O - L > .8 * (H - L)

If you want the lower shadow to be at least 2x the height of the real body, you would get:

O - L >= 2 * ABS(O - C) AND C - L >= 2 * ABS(O - C)

How "near" is "near the top of the range? If it is in the top 20% as in the original formula, we shouldn't need to check for the lower wick to be twice the size of the body, because it would be a given. Even having the body be entirely in the top third of the candle would be enough to not need to compare the size of the lower wick to the size of the body:

H - C < (H - L) / 3 AND H - O < (H - L) / 3

The simple way to check for this happening in the most recent 8-bars would be to use the desired formula as the Boolean Formula in a Custom PCF % True Indicator. You would then set the Period to 8 and the Average Type to Simple. If the value is greater than 0, than the requirements were met at least once during the most recent 8-bars. This means you could create a Condition for this by clicking on the Custom PCF % True Indicator and selecting Create Scan Conditon. You would choose Greater Than: 0.

Thank you Bruce:   I am a bit confused by all of the formulas given.  Let me know if this makes sense.  If I create a Condition based on the 4th formula above H - C < (H - L) / 3 AND H - O < (H - L) / 3 and set the period to "8" in the time frame drop down section, then I will be able to scan my watchlists for hammers with lower shadows 2x the height of the real body in the past 8 days???

Thank you, Justin.

Bruce,

I had a thought.  Is there anyway to highlight on the chart itself with a condition that a hammer is indeed a hammer?  For example, like a little dot right below a hammer when it appears kind of like an indicator?  That way, I could just have that as an overlap on my chart to begin with.  Just throwing an idea out there.  Let me know what you think.  Have a nice night.  Thank you.

Justin.

You add a Custom PCF % True Indicator to the chart with the desired formula as the Boolean Formula.

This will all by itself create a spike on the chart when the formula returns true. It will return 100% when true and 0% when false.

If you set the Period of the Custom PCF % True Indicator to 8 and the Average Type to Simple, it will return the percentage of the time during the most recent 8 bars that the Boolean Formula was true. So if it was true once in the most recent 8-bars it would return 12.5%. So twice would be 25%, three times would be 37.5%, four times would be 50%, five times would be 62.5%, six times would be 75%, seven times would be 87.5% and if all 8-bars returned true, the Custom PCF% True Indicator would return 100%.

You could just click on the Custom PCF % True Indicator and select Show Values in WatchList to use this percentage as a WatchList Column. Clicking on the WatchList Column Header would allow you to use these values as a sort.

Another option (which is what I outlined earlier), is to click on the Custom PCF % True Indicator and select Create Scan Condition. You will set Condition to Greater Than and you will set Greater Than to 0. If the result of the Custom PCF % True Indicator is greater than 0%, then the Condition would return true. This will only happen if the Boolean Formula was true at least once during the most recent 8-bars if you have the Period set to 8 and the Average Type set to Simple.

You could then use this Condition as a WatchList Column or you could use it as an EasyScan Condition. You are given an option to save the Condition so you can load it later or use it immediately when it is created.

Thank you for clearing that up Bruce!!!

You're welcome.