I am trying to write a program to help detect entry points to trade stocks just to see wether it can be helpful or not.
The first indicator I am looking at is the hammer candlestick. Every definition of the hammer I could find so far was about the same:
” body has to be at the upper end of the candle stick, lower shadow at least twice as long as the body, no or a short upper shadow”
The first two point are easy to program. The last one, however, I don't really know how to program. What would count as “short”? Is that the same length as the body, a fraction of the body, a fraction of the lower shadow? or better an absolut value determined with the help of the average move of the security it is used on?
Has anyone seen or made up for them self a clear definition of how long the upper shadow is allowed to be?
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