Friday, January 6, 2017

Candle Pattern Indicator

The Candle Pattern indicator identifies several popular candle-stick patterns which are then high-lighted on the chart.

The following patterns are supported: Doji, Spinning Top, Hammer, Shooting Star, Inverted Hammer, Hanging Man, Marubozu, Bullish Engulfing, Bearish Engulfing, Piercing Line, Dark Cloud, Bullish Harami, Bearish Harami, Morning Star, Evening Star.

Many of the identified candle patterns are only valid in a certain trend direction, e.g. a “Shooting star” may only appear in an up-trend. The indicator provides several techniques which can be used to determine the local trend. This is using the “Trend filter” option.

Currently the following “trend filters” are supported:
  • MVA
    • Simple moving average. If the current price is above the moving average line then it is an up-trend; if the current price is below the moving average line then it is a down-trend.
  • DMI
    • Directional Movement Index. The DMI indicator provides 2 outputs: DI+ and DI-. If DI+ is greater than DI- then it is an up-trend; if DI+ is less than DI- then it is a down-trend.
  • RSI
    • Relative Strength Index. This oscillator is often used for over-bought / over-sold detection. However, because it is essentially counting the ratio of up-moves to down-moves, it is also quite good at determining local trend. If the RSI level is greater than 60 then it is an up-trend; if the RSI level is less than 40 then it is a down-trend.

The “trend filter” can also be turned off (which means patterns can be detected regardless of trend direction).

The indicator provides several options for displaying the identified candle patterns, including labels, tool-tips, shaded rectangle, etc.

A separate “scanner” is also available, which can simultaneously analyse multiple instruments at 3 different time-frames.

Input Parameters


Educational Links

The following links provide some good background information on candle patterns:
NOTE: Links to third-party sites are provided for your convenience and for informational purposes only.

The indicator is available on the store.

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