Three Drive Pattern Detector [LuxAlgo]The Three Drives Pattern Detector indicator focuses on detecting and displaying completed Three Drives patterns on the user chart. This harmonic pattern is characterized by successive higher highs / lower lows following specific ratios.
The script uses a multi-length swing detection approach, as well as adjusting ratios to ensure flexibility and a maximum number of visible Three Drives patterns.
🔶 USAGE
The bullish/bearish Three Drives pattern is commonly interpreted as a reversal pattern and is characterized by three extensions (drives) and two intermediary retracements creating consecutive higher lows (for a bullish case) or lower highs (for a bearish case).
The multi-length swing detection approach taken by the indicator allows for detecting shorter-term alongside medium/longer-term patterns simultaneously, allowing to increase in the amount of detected patterns.
Users can set a Minimum Swing length (for example 2) and a Maximum Swing length (for example 100) which defines the range of the swing point detection length, higher values for these settings will detect longer-term Three-Drives patterns, while a larger range will allow for the detection of a larger number of patterns.
Sometimes multiple dashed lines as the last segment can be observed. This means multiple Three Drives patterns sharing multiple swing points have formed, with only the last segment being different.
🔹 Retracement/Extension Ratios
The Three Drives pattern often associates the retracement/extension to Fibonacci ratios of respectively 0.618/1.272.
Some sources specify a maximum retracement/extension level of 0.786/1.618, which means the retracement should be within the 0.618-0.786 range and the extension between 1.272-1.618.
Since finding a pattern where the retracement/extension is precisely at the 0.618/1.272 levels, or even between 0.618-0.786/1.272-1.618 is rare, the script allows users to adjust those ratios, which ensures more flexibility. Depending on the widening/tightening of the ratios, allowing users to find more patterns (but potentially less valid) or more valid (but fewer patterns).
In the example above, " Show Ratios " is set to " Ratios With Margin ", showing the ideal retracement/extension level together with the margin, while in the example below, " Show Ratios " is set to " Ratios ", which shows only a line where the price should ideally reverse.
While setting the ratios wider will result in more frequent but less valid patterns, it can also create good trading opportunities.
🔹 Best Practices
The indicator doesn't include Stop Loss (SL) or Take Profit (TP) levels, however, the 1.618 Fibonacci Extension level of the last leg can commonly be used as stop loss.
Typical Take Profit areas include:
Starting point of the pattern
Each retracement level (2x)
The 0.618 retracement level of the complete pattern
In the above bullish examples, the price was lower than the lowest point of the pattern. The price reversed and attained all TP levels without hitting the SL level.
In the above bearish example, the price went above the highest point of the pattern but did not hit the SL level, after which two TP levels were hit. Then, the price quickly went up, just missing the SL level before it came back down again, hitting the last 2 TP levels.
This example shows that other Fibonacci levels an also be effective when combined with the Three Drives pattern, even in the longer term.
🔶 DETAILS
🔹 Multi Length
The core of this publication is the multi-length swing detection. To ensure the maximum amount of Three Drives patterns are found, up to 99 different swing length periods can be used to detect swing points which are then tested for valid patterns.
Using a wider variety of swing points also ensures that patterns visible only with specific Swing settings can be found on the same chart without the user needing to constantly adjust the Swing settings to find other patterns.
The user only needs to set the desired minimum and maximum Swing Length.
In this case, swing detection using swing Lengths from 3 to 100 (97 different) are computed and evaluated for patterns. Three different patterns were found on the same chart, with swing lengths 3, 4, and 6.
Note: The Maximum Swing length should be equal to or higher than the Minimum Swing Length . If the maximum value is lower than the minimum, the script will automatically take the minimum value as the maximum to prevent errors.
🔹 Width Margin %
Users can filter out patterns based on the duration of each extension/retracement segment. When the users want segments of the detected patterns to be of a similar duration, the width percentage should be set lower. When the focus is on detecting more patterns the width percentage can be set higher.
🔹 Retracement/Extension Settings
Show Ratios , set to Ratios , show the ideal Fibonacci retracement/extension level, while Ratios With Margin (example below) show the additional margins for retracement/extension.
The upper and lower limits can be visualized while hovering over the calculated ratio label.
The dashed line shows an older pattern, where the last leg has been updated.
🔹 Last Known Pattern
The included dashboard highlights the date of the most recently detected pattern; the text will show " None " if no pattern is found.
🔹 Calculated Bars
The "Calculated Bars" setting makes use of the recently introduced calc_bars_count parameter, making it possible to effectively reduce the number of historical bars during the computation of the script, which significantly improves the loading speed of the script.
Users wishing to see the most recent patterns can set this setting to 1000 for example, where only the most recent 1000 bars are used to find patterns. If every bar must be used for pattern detection, set " Calculated bars " at 0.
🔶 SETTINGS
Minimum Swing Length: Minimum length used for the swing detection.
Maximum Swing Length: Maximum length used for the swing detection.
Retracement: Range of required ratios used for testing retracements.
Extension: Range of required ratios used for testing extensions.
Width Margin: Influences the symmetry of the pattern; with a higher number allowing for less symmetry.
🔹 Style
Text Size: Text size of the ratio labels.
Show Ratios: Show the ideal ratio, upper/lower limit of ratios, or none.
🔹 Dashboard
Show Dashboard: Toggle dashboard which shows the date of the last found pattern.
Location: Location of the dashboard on the chart.
Size: Text size.
🔹 Calculation
Calculated Bars: Allows the usage of fewer bars for performance/speed improvement.
Các Mô hình Harmonic
Butterfly Harmonic Pattern [TradingFinder] Harmonic Detector🔵 Introduction
The Butterfly Harmonic Pattern is a sophisticated and highly regarded tool in technical analysis, utilized by traders to identify potential reversal points in the financial markets. This pattern is distinguished by its reliance on Fibonacci ratios and geometric configurations, which aid in predicting price movements with remarkable precision.
The origin of the Butterfly Harmonic Pattern can be traced back to the pioneering work of Bryce Gilmore, who is credited with discovering this pattern. Gilmore's extensive research and expertise in Fibonacci ratios laid the groundwork for the identification and application of this pattern in technical analysis.
The Butterfly pattern, like other harmonic patterns, is based on the principle that market movements are not random but follow specific structures and ratios.
The pattern is characterized by a distinct "M" shape in bullish scenarios and a "W" shape in bearish scenarios, each indicating a potential reversal point. These formations are identified by specific Fibonacci retracement and extension levels, making the Butterfly pattern a powerful tool for traders seeking to capitalize on market turning points.
The precise nature of the Butterfly pattern allows for the accurate prediction of target prices and the establishment of strategic entry and exit points, making it an indispensable component of a trader's analytical arsenal.
Bullish :
Bearish :
🔵 How to Use
Like other harmonic patterns, the Butterfly pattern is categorized based on how it forms at the end of an uptrend or downtrend. Unlike the Gartley and Bat patterns, the Butterfly pattern, similar to the Crab pattern, forms outside the wave 3 range at the end of a rally.
🟣 Types of Butterfly Harmonic Patterns
🟣 Bullish Butterfly Pattern
This pattern forms at the end of a downtrend and leads to a trend reversal from a downtrend to an uptrend.
🟣 Bearish Butterfly Pattern
In contrast to the Bullish Butterfly pattern, this pattern forms at the end of an uptrend and warns analysts of a trend reversal to a downtrend. In this case, traders are encouraged to shift their trading stance from buy trades to sell trades.
Advantages and Limitations of the Butterfly Pattern in Technical Analysis :
The Butterfly pattern is considered one of the precise and stable tools in financial market analysis. However, it is always important to pay special attention to the advantages and limitations of each pattern.
Here, we review the advantages and disadvantages of using the Butterfly harmonic pattern :
The main advantage of the Butterfly pattern is providing very accurate signals.
Using Fibonacci golden ratios and geometric rules, the Butterfly pattern identifies patterns accurately and systematically. (This high accuracy significantly helps investors in making trading decisions.)
Identifying this pattern requires expertise and experience in technical analysis.
Recognizing the Butterfly pattern might be complex for beginner traders. (Correct identification of the pattern necessitates mastery over geometric principles and Fibonacci ratios.)
The Butterfly harmonic pattern might issue false trading signals. (Traders usually combine the Butterfly pattern with other technical tools to confirm buy and sell signals.)
🔵 Setting
🟣 Logical Setting
ZigZag Pivot Period : You can adjust the period so that the harmonic patterns are adjusted according to the pivot period you want. This factor is the most important parameter in pattern recognition.
Show Valid Forma t: If this parameter is on "On" mode, only patterns will be displayed that they have exact format and no noise can be seen in them. If "Off" is, the patterns displayed that maybe are noisy and do not exactly correspond to the original pattern.
Show Formation Last Pivot Confirm : if Turned on, you can see this ability of patterns when their last pivot is formed. If this feature is off, it will see the patterns as soon as they are formed. The advantage of this option being clear is less formation of fielded patterns, and it is accompanied by the latest pattern seeing and a sharp reduction in reward to risk.
Period of Formation Last Pivot : Using this parameter you can determine that the last pivot is based on Pivot period.
🟣 Genaral Setting
Show : Enter "On" to display the template and "Off" to not display the template.
Color : Enter the desired color to draw the pattern in this parameter.
LineWidth : You can enter the number 1 or numbers higher than one to adjust the thickness of the drawing lines. This number must be an integer and increases with increasing thickness.
LabelSize : You can adjust the size of the labels by using the "size.auto", "size.tiny", "size.smal", "size.normal", "size.large" or "size.huge" entries.
🟣 Alert Setting
Alert : On / Off
Message Frequency : This string parameter defines the announcement frequency. Choices include: "All" (activates the alert every time the function is called), "Once Per Bar" (activates the alert only on the first call within the bar), and "Once Per Bar Close" (the alert is activated only by a call at the last script execution of the real-time bar upon closing). The default setting is "Once per Bar".
Show Alert Time by Time Zone : The date, hour, and minute you receive in alert messages can be based on any time zone you choose. For example, if you want New York time, you should enter "UTC-4". This input is set to the time zone "UTC" by default.
Logarithmic and Linear Fibonacci LevelsIntroduction
Fibonacci levels are a technical analysis tool used by some traders to identify potential support and resistance levels. The principle for determining these levels is to take the distance between selected reference high and low points (swing high and swing low in general) as 1 unit and mark the ratios derived from the Fibonacci sequence, such as 0.236, 0.382, 0.618, etc., over this 1 unit. In the conventional method of level determination, the 1 unit is divided into equal distances within itself, and Fibonacci levels are determined based on these equal distances. These types of levels are called Linear Levels . A relatively less common method involves dividing the 1 unit into progressively smaller, more accurately described as proportionally equal, distances and determining Fibonacci levels based on these distances. These types are called Logarithmic Levels . The purpose of this indicator is to provide ease of use in determining both Linear and Logarithmic levels.
Where can it be Used?
Logarithmic Levels can be used in any instrument where volatility is high for any reason. Specifically in crypto, Logarithmic Levels work very well for BINANCE:BTCUSDT (to observe this, please study the wick from January 23, 2024). As another example, Logarithmic Levels can be used to identify potential accumulation and distribution schemes in altcoins with relatively high volume and market capitalization (refer to the chart provided above BINANCE:FETUSDT ). Additionally, when analyzing traditional markets, Logarithmic Levels can be beneficial for stocks with highly inflated or deflated prices (e.g., NASDAQ:TSLA , NASDAQ:NVDA ), in stock markets of countries battling high inflation (e.g., BIST:XU100 ), or in currency pairs of countries experiencing a recession (e.g., FX_IDC:JPYUSD ).
How can it be Used?
It is designed similarly to the Fibonacci Tool provided by Trading View to ensure users feel familiar with it. When you start the indicator, select the reference levels (Level 1 and Level 0), then click on the indicator settings to choose specific levels and customize them according to your preferences.
What Makes it Unique?
Indeed, in the Fibonacci Tool provided by Trading View, we can see both linear and logarithmic levels. However, to view logarithmic levels, it is necessary to switch the relevant instrument's Super Chart to a logarithmic scale. This causes the levels we want to remain 'linear' to also be displayed in their logarithmic form, potentially leading to errors in other indicators we use, incorrect functioning of trend lines drawn in linear scaling, and so on. Additionally, when the Super Chart is scaled logarithmically, it prevents the ability to set alerts for prices and trend lines. This indicator was created to avoid these problems without needing to change the chart's scaling method and to allow the simultaneous viewing of both Linear and Logarithmic levels.
Large Shadow Detector V.1Large Shadow Detector for TradingView
This Pine Script indicator highlights candles with shadows (wicks) exceeding a customizable threshold in points on the XAU/USD chart, specifically for the 1-hour timeframe.
Key Features:
Customizable Shadow Threshold: An input field allows users to set the threshold for detecting large shadows. The default is set to 3400 points.
Upper and Lower Shadows Calculation: The script calculates the upper and lower shadows of each candle.
Condition Checks: It checks if the shadows exceed the defined threshold.
Visual Indicators: Red triangles are plotted above candles with large upper shadows, and green triangles are plotted below candles with large lower shadows.
All Harmonic Patterns [theEccentricTrader]█ OVERVIEW
This indicator automatically draws and sends alerts for all of the harmonic patterns in my public library as they occur. The patterns included are as follows:
• Bearish 5-0
• Bullish 5-0
• Bearish ABCD
• Bullish ABCD
• Bearish Alternate Bat
• Bullish Alternate Bat
• Bearish Bat
• Bullish Bat
• Bearish Butterfly
• Bullish Butterfly
• Bearish Cassiopeia A
• Bullish Cassiopeia A
• Bearish Cassiopeia B
• Bullish Cassiopeia B
• Bearish Cassiopeia C
• Bullish Cassiopeia C
• Bearish Crab
• Bullish Crab
• Bearish Deep Crab
• Bullish Deep Crab
• Bearish Cypher
• Bullish Cypher
• Bearish Gartley
• Bullish Gartley
• Bearish Shark
• Bullish Shark
• Bearish Three-Drive
• Bullish Three-Drive
█ CONCEPTS
Green and Red Candles
• A green candle is one that closes with a close price equal to or above the price it opened.
• A red candle is one that closes with a close price that is lower than the price it opened.
Swing Highs and Swing Lows
• A swing high is a green candle or series of consecutive green candles followed by a single red candle to complete the swing and form the peak.
• A swing low is a red candle or series of consecutive red candles followed by a single green candle to complete the swing and form the trough.
Peak and Trough Prices
• The peak price of a complete swing high is the high price of either the red candle that completes the swing high or the high price of the preceding green candle, depending on which is higher.
• The trough price of a complete swing low is the low price of either the green candle that completes the swing low or the low price of the preceding red candle, depending on which is lower.
Historic Peaks and Troughs
The current, or most recent, peak and trough occurrences are referred to as occurrence zero. Previous peak and trough occurrences are referred to as historic and ordered numerically from right to left, with the most recent historic peak and trough occurrences being occurrence one.
Upper Trends
• A return line uptrend is formed when the current peak price is higher than the preceding peak price.
• A downtrend is formed when the current peak price is lower than the preceding peak price.
• A double-top is formed when the current peak price is equal to the preceding peak price.
Lower Trends
• An uptrend is formed when the current trough price is higher than the preceding trough price.
• A return line downtrend is formed when the current trough price is lower than the preceding trough price.
• A double-bottom is formed when the current trough price is equal to the preceding trough price.
Range
The range is simply the difference between the current peak and current trough prices, generally expressed in terms of points or pips.
Wave Cycles
A wave cycle is here defined as a complete two-part move between a swing high and a swing low, or a swing low and a swing high. The first swing high or swing low will set the course for the sequence of wave cycles that follow; for example a chart that begins with a swing low will form its first complete wave cycle upon the formation of the first complete swing high and vice versa.
Figure 1.
Retracement and Extension Ratios
Retracement and extension ratios are calculated by dividing the current range by the preceding range and multiplying the answer by 100. Retracement ratios are those that are equal to or below 100% of the preceding range and extension ratios are those that are above 100% of the preceding range.
Fibonacci Retracement and Extension Ratios
The Fibonacci sequence is a series of numbers in which each number is the sum of the two preceding numbers, starting with 0 and 1. For example 0 + 1 = 1, 1 + 1 = 2, 1 + 2 = 3, and so on. Ultimately, we could go on forever but the first few numbers in the sequence are as follows: 0 , 1, 1, 2, 3, 5, 8, 13, 21, 34, 55, 89, 144.
The extension ratios are calculated by dividing each number in the sequence by the number preceding it. For example 0/1 = 0, 1/1 = 1, 2/1 = 2, 3/2 = 1.5, 5/3 = 1.6666..., 8/5 = 1.6, 13/8 = 1.625, 21/13 = 1.6153..., 34/21 = 1.6190..., 55/34 = 1.6176..., 89/55 = 1.6181..., 144/89 = 1.6179..., and so on. The retracement ratios are calculated by inverting this process and dividing each number in the sequence by the number proceeding it. For example 0/1 = 0, 1/1 = 1, 1/2 = 0.5, 2/3 = 0.666..., 3/5 = 0.6, 5/8 = 0.625, 8/13 = 0.6153..., 13/21 = 0.6190..., 21/34 = 0.6176..., 34/55 = 0.6181..., 55/89 = 0.6179..., 89/144 = 0.6180..., and so on.
Fibonacci ranges are typically drawn from left to right, with retracement levels representing ratios inside of the current range and extension levels representing ratios extended outside of the current range. If the current wave cycle ends on a swing low, the Fibonacci range is drawn from peak to trough. If the current wave cycle ends on a swing high the Fibonacci range is drawn from trough to peak.
Measurement Tolerances
Tolerance refers to the allowable variation or deviation from a specific value or dimension. It is the range within which a particular measurement is considered to be acceptable or accurate. I have applied this concept in my pattern detection logic and have set default tolerances where applicable, as perfect patterns are, needless to say, very rare.
Chart Patterns
Generally speaking price charts are nothing more than a series of swing highs and swing lows. When demand outweighs supply over a period of time prices swing higher and when supply outweighs demand over a period of time prices swing lower. These swing highs and swing lows can form patterns that offer insight into the prevailing supply and demand dynamics at play at the relevant moment in time.
‘Let us assume… that you the reader, are not a member of that mysterious inner circle known to the boardrooms as “the insiders”… But it is fairly certain that there are not nearly so many “insiders” as amateur trader supposes and… It is even more certain that insiders can be wrong… Any success they have, however, can be accomplished only by buying and selling… hey can do neither without altering the delicate poise of supply and demand that governs prices. Whatever they do is sooner or later reflected on the charts where you… can detect it. Or detect, at least, the way in which the supply-demand equation is being affected… So, you do not need to be an insider to ride with them frequently… prices move in trends. Some of those trends are straight, some are curved; some are brief and some are long and continued… produced in a series of action and reaction waves of great uniformity. Sooner or later, these trends change direction; they may reverse (as from up to down), or they may be interrupted by some sort of sideways movement and then, after a time, proceed again in their former direction… when a price trend is in the process of reversal… a characteristic area or pattern takes shape on the chart, which becomes recognisable as a reversal formation… Needless to say, the first and most important task of the technical chart analyst is to learn to know the important reversal formations and to judge what they may signify in terms of trading opportunities’ (Edwards & Magee, 1948).
This is as true today as it was when Edwards and Magee were writing in the first half of the last Century, study your patterns and make judgements for yourself about what their implications truly are on the markets and timeframes you are interested in trading.
Over the years, traders have come to discover a multitude of chart and candlestick patterns that are supposed to pertain information on future price movements. However, it is never so clear cut in practice and patterns that where once considered to be reversal patterns are now considered to be continuation patterns and vice versa. Bullish patterns can have bearish implications and bearish patterns can have bullish implications. As such, I would highly encourage you to do your own backtesting.
There is no denying that chart patterns exist, but their implications will vary from market to market and timeframe to timeframe. So it is down to you as an individual to study them and make decisions about how they may be used in a strategic sense.
Harmonic Patterns
The concept of harmonic patterns in trading was first introduced by H.M. Gartley in his book "Profits in the Stock Market", published in 1935. Gartley observed that markets have a tendency to move in repetitive patterns, and he identified several specific patterns that he believed could be used to predict future price movements. The bullish and bearish Gartley patterns are the oldest recognized harmonic patterns in trading and all the other harmonic patterns are modifications of the original Gartley patterns. Gartley patterns are fundamentally composed of 5 points, or 4 waves.
Since then, many other traders and analysts have built upon Gartley's work and developed their own variations of harmonic patterns. One such contributor is Larry Pesavento, who developed his own methods for measuring harmonic patterns using Fibonacci ratios. Pesavento has written several books on the subject of harmonic patterns and Fibonacci ratios in trading. Another notable contributor to harmonic patterns is Scott Carney, who developed his own approach to harmonic trading in the late 1990s and also popularised the use of Fibonacci ratios to measure harmonic patterns. Carney expanded on Gartley's work and also introduced several new harmonic patterns, such as the Shark pattern and the 5-0 pattern.
█ INPUTS
• Change pattern and label colours
• Show or hide patterns individually
• Adjust pattern tolerances
• Set or remove alerts for individual patterns
█ NOTES
You can test the patterns with your own strategies manually by applying the indicator to your chart while in bar replay mode and playing through the history. You could also automate this process with PineScript by using the conditions from my swing and pattern libraries as entry conditions in the strategy tester or your own custom made strategy screener.
█ LIMITATIONS
All green and red candle calculations are based on differences between open and close prices, as such I have made no attempt to account for green candles that gap lower and close below the close price of the preceding candle, or red candles that gap higher and close above the close price of the preceding candle. This may cause some unexpected behaviour on some markets and timeframes. I can only recommend using 24-hour markets, if and where possible, as there are far fewer gaps and, generally, more data to work with.
█ SOURCES
Edwards, R., & Magee, J. (1948) Technical Analysis of Stock Trends (10th edn). Reprint, Boca Raton, Florida: Taylor and Francis Group, CRC Press: 2013.
Gartley Harmonic Pattern [TradingFinder] Harmonic Chart patterns🔵 Introduction
Research by H.M. Gartley and Scott Carney emphasizes the importance of harmonic patterns in technical analysis for predicting market movements. Gartley's work, particularly the Gartley 222 pattern, is detailed in his book "Profits in the Stock Market" and relies on the specific placement of points X, A, B, C, and D.
🟣 Defining the Gartley Pattern
The Gartley pattern is a powerful technical analysis tool often seen at the end of a trend, signaling a potential reversal. Ideally, it forms during the first and second waves of Elliott Wave theory, with wave XA representing wave 1 and the entire ABCD correction representing wave 2.
While patterns outside this structure are also valid, the key points of the Gartley pattern align closely with Fibonacci retracement levels. Specifically, point B corrects wave XA to the 61.8% level, point C lies between 38% and 79% of wave AB, and point D extends between 113% and 162% of wave BC.
The bullish Gartley pattern, shown below, forms at the end of a downtrend and signals a potential buying opportunity.
Bullish :
Bearish :
🔵 How to Use
🟣 Bullish Gartley Pattern
To spot a bullish Gartley pattern, follow these rules: the move from point X to point A (the first leg) must be upward. The subsequent move from point A to point B is downward, followed by an upward move from point B to point C.
Finally, the move from point C to point D is downward. On a chart, this pattern resembles the letter M. After the final leg of this pattern, prices are expected to rise from point D.
🟣 Bearish Gartley Pattern
A bearish Gartley pattern forms similarly to the bullish one but in reverse. The initial move from point X to point A should be downward. The next move from point A to point B is upward, followed by a downward move from point B to point C.
The final leg moves upward from point C to point D. This pattern appears as a W on charts, indicating that prices are likely to fall from point D after the final move.
By understanding and identifying Gartley patterns, traders can enhance their technical analysis and improve their decision-making in financial markets. These patterns, when correctly identified, offer significant insights into potential market reversals and continuation patterns.
🔵 Setting
🟣 Logical Setting
ZigZag Pivot Period : You can adjust the period so that the harmonic patterns are adjusted according to the pivot period you want. This factor is the most important parameter in pattern recognition.
Show Valid Format : If this parameter is on "On" mode, only patterns will be displayed that they have exact format and no noise can be seen in them. If "Off" is, the patterns displayed that maybe are noisy and do not exactly correspond to the original pattern
Show Formation Last Pivot Confirm : if Turned on, you can see this ability of patterns when their last pivot is formed. If this feature is off, it will see the patterns as soon as they are formed. The advantage of this option being clear is less formation of fielded patterns, and it is accompanied by the latest pattern seeing and a sharp reduction in reward to risk.
Period of Formation Last Pivot : Using this parameter you can determine that the last pivot is based on Pivot period.
🟣 Genaral Setting
Show : Enter "On" to display the template and "Off" to not display the template.
Color : Enter the desired color to draw the pattern in this parameter.
LineWidth : You can enter the number 1 or numbers higher than one to adjust the thickness of the drawing lines. This number must be an integer and increases with increasing thickness.
LabelSize : You can adjust the size of the labels by using the "size.auto", "size.tiny", "size.smal", "size.normal", "size.large" or "size.huge" entries.
🟣 Alert Setting
Alert : On / Off
Message Frequency : This string parameter defines the announcement frequency. Choices include: "All" (activates the alert every time the function is called), "Once Per Bar" (activates the alert only on the first call within the bar), and "Once Per Bar Close" (the alert is activated only by a call at the last script execution of the real-time bar upon closing). The default setting is "Once per Bar".
Show Alert Time by Time Zone : The date, hour, and minute you receive in alert messages can be based on any time zone you choose. For example, if you want New York time, you should enter "UTC-4". This input is set to the time zone "UTC" by default.
Crab Harmonic Pattern [TradingFinder] Harmonic Chart patterns🔵 Introduction
The Crab pattern is recognized as a reversal pattern in technical analysis, utilizing Fibonacci numbers and percentages for chart analysis. This pattern can predict suitable price reversal areas on charts using Fibonacci ratios.
The structure of the Crab pattern can manifest in both bullish and bearish forms on the chart. By analyzing this structure, traders can identify points where the price direction changes, which are essential for making informed trading decisions.
The pattern's structure is visually represented on charts as shown below. To gain a deeper understanding of the Crab pattern's functionality, it is beneficial to become familiar with its various harmonic forms.
🟣 Types of Crab Patterns
The Crab pattern is categorized into two types based on its structure: bullish and bearish. The bullish Crab is denoted by the letter M, while the bearish Crab is indicated by the letter W in technical analysis.
Typically, a bullish Crab pattern signals a potential price increase, whereas a bearish Crab pattern suggests a potential price decrease on the chart.
The direction of price movement depends significantly on the price's position within the chart. By identifying whether the pattern is bullish or bearish, traders can determine the likely direction of the price reversal.
Bullish Crab :
Bearish Crab :
🔵 How to Use
When trading using the Crab pattern, crucial parameters include the end time of the correction and the point at which the chart reaches its peak. Generally, the best time to buy is when the chart nears the end of its correction, and the best time to sell is when it approaches the peak price.
As we discussed, the end of the price correction and the time to reach the peak are measured using Fibonacci ratios. By analyzing these levels, traders can estimate the end of the correction in the chart waves and select a buying position for their stock or asset upon reaching that ratio.
🟣 Bullish Crab Pattern
In this pattern, the stock price is expected to rise at the pattern's completion, transitioning into an upward trend. The bullish Crab pattern usually begins with an upward trend, followed by a price correction, after which the stock resumes its upward movement.
If a deeper correction occurs, the price will change direction at some point on the chart and rise again towards its target price. Price corrections play a critical role in this pattern, as it aims to identify entry and exit points using Fibonacci ratios, allowing traders to make purchases at the end of the corrections.
When the price movement lines are connected on the chart, the bullish Crab pattern resembles the letter M.
🟣 Bearish Crab Pattern
In this pattern, the stock price is expected to decline at the pattern's completion, leading to a strong downward trend. The bearish Crab pattern typically starts with a price correction in a downward trend and, after several fluctuations, reaches a peak where the direction changes downward, resulting in a significant price drop.
This pattern uses Fibonacci ratios to identify points where the price movement is likely to change direction, enabling traders to exit their positions at the chart's peak. When the price movement lines are connected on the chart, the bearish Crab pattern resembles the letter W.
🔵 Setting
🟣 Logical Setting
ZigZag Pivot Period : You can adjust the period so that the harmonic patterns are adjusted according to the pivot period you want. This factor is the most important parameter in pattern recognition.
Show Valid Format : If this parameter is on "On" mode, only patterns will be displayed that they have exact format and no noise can be seen in them. If "Off" is, the patterns displayed that maybe are noisy and do not exactly correspond to the original pattern.
Show Formation Last Pivot Confirm : if Turned on, you can see this ability of patterns when their last pivot is formed. If this feature is off, it will see the patterns as soon as they are formed. The advantage of this option being clear is less formation of fielded patterns, and it is accompanied by the latest pattern seeing and a sharp reduction in reward to risk.
Period of Formation Last Pivot : Using this parameter you can determine that the last pivot is based on Pivot period.
🟣 Genaral Setting
Show : Enter "On" to display the template and "Off" to not display the template.
Color : Enter the desired color to draw the pattern in this parameter.
LineWidth : You can enter the number 1 or numbers higher than one to adjust the thickness of the drawing lines. This number must be an integer and increases with increasing thickness.
LabelSize : You can adjust the size of the labels by using the "size.auto", "size.tiny", "size.smal", "size.normal", "size.large" or "size.huge" entries.
🟣 Alert Setting
Alert : On / Off
Message Frequency : This string parameter defines the announcement frequency. Choices include: "All" (activates the alert every time the function is called), "Once Per Bar" (activates the alert only on the first call within the bar), and "Once Per Bar Close" (the alert is activated only by a call at the last script execution of the real-time bar upon closing). The default setting is "Once per Bar".
Show Alert Time by Time Zone : The date, hour, and minute you receive in alert messages can be based on any time zone you choose. For example, if you want New York time, you should enter "UTC-4". This input is set to the time zone "UTC" by default.
Wolfe Wave Detector [LuxAlgo]The Wolfe Wave Detector displays occurrences of Wolfe Waves, alongside a target line. A multiple swing detection approach is used to maximize the number of detected waves.
The indicator includes a dashboard with the number of detected waves, as well as the number of reached targets.
🔶 USAGE
The Wolfe Wave pattern is a chart pattern composed of five segments, with the initial segment extremities (points XABCD) forming a channel containing price variations.
After the price reaches point D , we can expect a reversal toward a target line (point E ). The target line is obtained by connecting and extending point X -> C .
The script draws the XABCD pattern and a projection of where E might potentially be located.
The projection is derived from the intersection between the target line and a line starting from D , parallel to B-C . From this line, margins are added, left and right, creating a wedge-shaped figure in most cases.
When the price passes the target line, this is highlighted by a dot. The dot and pattern are green by default when the target is above D and red when the target is below D . Colors can be edited in the settings. The dashed target line is colored in the opposite color.
As seen in the above example, the price trend can reverse after reaching the target line.
🔹 Symmetry
Ideally, the Wolfe Wave must have a degree of symmetry; every upward line should have a similar angle to the other upward lines, and the same should be true for the downward lines.
Also, the lines forming the channel should be as parallel as possible.
Users have the option to adjust the tolerance:
Margin controls the wave symmetry of the pattern
Angle controls the channel symmetry of the pattern
It's important to note that in both cases, a lower number will lead to more symmetrical patterns, but they may appear less frequently.
It is also important to note that increasing the Margin can delay validating the pattern. In the meantime, the price could surpass the channel in the opposite direction, invalidating and deleting the otherwise valid pattern.
🔹 Multiple Swings
Users can set a Minimum Swing length (for example 2) and a Maximum Swing length (for example 100) which defines the range of the swing point detection length, higher values for these settings will detect longer-term Wolfe patterns, while a larger range will allow for the detection of a larger number of patterns.
By using multiple swings, it is possible to find smaller next to larger patterns at the same time.
The dashboard shows the number of patterns found and targets reached. When, for example, bullish patterns are disabled in the settings, the dashboard only shows the results of bearish patterns.
🔹 Extend Target Line
The publication includes a setting that allows the Target Line to be extended up to 50 bars further. As seen in the above example, the Target Line can still be reached even after the pattern has been finalized. Once the Target Line is reached, it won't be updated further.
Here is another example of a Target Line being reached later on.
The Target Line acted as a support level, after which where the price changed direction.
🔹 Show Progression
An option is included to show the progression before the pattern is completed. Users can make use of the XABC pattern or visualize where point D should be positioned.
The focus lies on the bar range (between the left and right borders of the grey rectangle). The pattern is considered invalid and deleted when point D is beyond these limits. The height of the rectangle is optional. Ideally, the price should be located between the top and bottom of the rectangle, but it is not mandatory.
Show Progression has three options including:
Full: Show all lines of XABC plus line C-D and rectangle for the position of point D
Partial: Show line C-D and rectangle for the position of point D
None: Only show valid completed patterns
The 'Partial' option in the 'Show Progression' feature is designed to help users locate the desired position of point D without the visual clutter caused by the XABC lines. This can be useful for those who prefer a cleaner visual representation of the evolving pattern.
🔶 SETTINGS
🔹 Swing Length
Minimum: Minimum length used for the swing detection.
Maximum Swing Length: Maximum length used for the swing detection.
🔹 Tolerance
Margin: Influences the symmetry of the pattern; with a higher number allowing for less symmetry.
Angle: Influences the symmetry of the channel; with a higher number allowing for less symmetry.
🔹 Style
Toggle: Bullish/Bearish + colors
Extend Target Line: Extend a maximum of 50 bars or until Target Line is reached
Show Progression: Show pattern progression
Dot Size: The size of the dot when the Target Line is reached
🔹 Dashboard
Show Dashboard: Toggle dashboard which shows the number of found patterns and targets reached.
Location: Location of the dashboard on the chart.
Text Size: Text size.
🔹 Calculation
Calculated Bars: Allows the usage of fewer bars for performance/speed improvement
Adaptive Trend Lines [MAMA and FAMA]Updated my previous algo on the Adaptive Trend lines, however I have added new functionalities and sorted out the settings.
You can now switch between normalized and non-normalized settings, the colors have also been updated and look much better.
The MAMA and FAMA
These indicators was originally developed by John F. Ehlers (Stocks & Commodities V. 19:10: MESA Adaptive Moving Averages). Everget wrote the initial functions for these in pine script. I have simply normalized the indicators and chosen to use the Laplace transformation instead of the hilbert transformation
How the Indicator Works:
The indicator employs a series of complex calculations, but we'll break it down into key steps to understand its functionality:
LaplaceTransform: Calculates the Laplace distribution for the given src input. The Laplace distribution is a continuous probability distribution, also known as the double exponential distribution. I use this because of the assymetrical return profile
MESA Period: The indicator calculates a MESA period, which represents the dominant cycle length in the price data. This period is continuously adjusted to adapt to market changes.
InPhase and Quadrature Components: The InPhase and Quadrature components are derived from the Hilbert Transform output. These components represent different aspects of the price's cyclical behavior.
Homodyne Discriminator: The Homodyne Discriminator is a phase-sensitive technique used to determine the phase and amplitude of a signal. It helps in detecting trend changes.
Alpha Calculation: Alpha represents the adaptive factor that adjusts the sensitivity of the indicator. It is based on the MESA period and the phase of the InPhase component. Alpha helps in dynamically adjusting the indicator's responsiveness to changes in market conditions.
MAMA and FAMA Calculation: The MAMA and FAMA values are calculated using the adaptive factor (alpha) and the input price data. These values are essentially adaptive moving averages that aim to capture the current trend more effectively than traditional moving averages.
But Omar, why would anyone want to use this?
The MAMA and FAMA lines offer benefits:
The indicator offers a distinct advantage over conventional moving averages due to its adaptive nature, which allows it to adjust to changing market conditions. This adaptability ensures that investors can stay on the right side of the trend, as the indicator becomes more responsive during trending periods and less sensitive in choppy or sideways markets.
One of the key strengths of this indicator lies in its ability to identify trends effectively by combining the MESA and MAMA techniques. By doing so, it efficiently filters out market noise, making it highly valuable for trend-following strategies. Investors can rely on this feature to gain clearer insights into the prevailing trends and make well-informed trading decisions.
This indicator is primarily suppoest to be used on the big timeframes to see which trend is prevailing, however I am not against someone using it on a timeframe below the 1D, just be careful if you are using this for modern portfolio theory, this is not suppoest to be a mid-term component, but rather a long term component that works well with proper use of detrended fluctuation analysis.
Dont hesitate to ask me if you have any questions
Again, I want to give credit to Everget and ChartPrime!
Code explanation as required by House Rules:
fastLimit = input.float(title='Fast Limit', step=0.01, defval=0.01, group = "Indicator Settings")
slowLimit = input.float(title='Slow Limit', step=0.01, defval=0.08, group = "Indicator Settings")
src = input(title='Source', defval=close, group = "Indicator Settings")
input.float: Used to create input fields for the user to set the fastLimit and slowLimit values.
input: General function to get user inputs, like the data source (close price) used for calculations.
norm_period = input.int(3, 'Normalization Period', 1, group = "Normalized Settings")
norm = input.bool(defval = true, title = "Use normalization", group = "Normalized Settings")
input.int: Creates an input field for the normalization period.
input.bool: Allows the user to toggle normalization on or off.
Color settings in the code:
col_up = input.color(#22ab94, group = "Color Settings")
col_dn = input.color(#f7525f, group = "Color Settings")
Constants and functions
var float PI = math.pi
laplace(src) =>
(0.5) * math.exp(-math.abs(src))
_computeComponent(src, mesaPeriodMult) =>
out = laplace(src) * mesaPeriodMult
out
_smoothComponent(src) =>
out = 0.2 * src + 0.8 * nz(src )
out
math.pi: Represents the mathematical constant π (pi).
laplace: A function that applies the Laplace transform to the source data.
_computeComponent: Computes a component of the data using the Laplace transform.
_smoothComponent: Smooths data by averaging the current value with the previous one (nz function is used to handle null values).
Alpha function:
_computeAlpha(src, fastLimit, slowLimit) =>
mesaPeriod = 0.0
mesaPeriodMult = 0.075 * nz(mesaPeriod ) + 0.54
...
alpha = math.max(fastLimit / deltaPhase, slowLimit)
out = alpha
out
_computeAlpha: Calculates the adaptive alpha value based on the fastLimit and slowLimit. This value is crucial for determining the MAMA and FAMA lines.
Calculating MAMA and FAMA:
mama = 0.0
mama := alpha * src + (1 - alpha) * nz(mama )
fama = 0.0
fama := alpha2 * mama + (1 - alpha2) * nz(fama )
Normalization:
lowest = ta.lowest(mama_fama_diff, norm_period)
highest = ta.highest(mama_fama_diff, norm_period)
normalized = (mama_fama_diff - lowest) / (highest - lowest) - 0.5
ta.lowest and ta.highest: Find the lowest and highest values of mama_fama_diff over the normalization period.
The oscillator is normalized to a range, making it easier to compare over different periods.
And finally, the plotting:
plot(norm == true ? normalized : na, style=plot.style_columns, color=col_wn, title = "mama_fama_diff Oscillator Normalized")
plot(norm == false ? mama_fama_diff : na, style=plot.style_columns, color=col_wnS, title = "mama_fama_diff Oscillator")
Example of Normalized settings:
Example for setup:
Try to make sure the lower timeframe follows the higher timeframe if you take a trade based on this indicator!
Bitcoin Rainbow WaveBitcoin ultimate price model:
1. Power Law + 2. Rainbow Narrowing Bands + 3. Halving Cycle Harmonic Wave + 3. Wave bands
This powerful tool is designed to help traders of all levels understand and navigate the Bitcoin market. It works exclusively with BTC on any timeframe, but looks best on weekly or daily charts. The indicator provides valuable insights into historical price behavior and offers forecasts for the next decade, making it essential for both mid-term and long-term strategies.
How the Model Works
Power Law (Logarithmic Trend) : The green line represents the expected long-term price trajectory of Bitcoin based on a logarithmic regression model (power law). This suggests that Bitcoin's price generally increases as a power of 5.44 over time passed.
Rainbow Chart : Colored bands around the power law trend line illustrate a range of potential price fluctuations. The bands narrow esponentially over time, indicating increasing model accuracy as Bitcoin matures. This chart visually identifies overbought and oversold zones, as well as fair value zones.
Blue Zone : Below the power law trend, indicating an undervalued condition and a potential buying zone.
Green Zone : Around the power law trend, suggesting fair value.
Yellow Zone : Above the power law trend, but within the rainbow bands. Exercise caution, as the price may be overextended.
Red Zone : Far above the power law trend, indicating strong overbought conditions. Consider taking profits or reducing exposure.
Halving Cycle Wave : The fuchsia line represents the cyclical wave component of the model, tied to Bitcoin's halving events (approximately every four years). This wave accounts for the price fluctuations that typically occur around halvings, with price tending to increase leading up to a halving and correct afterwards. The amplitude of the wave decreases over time as the impact of halvings potentially lessens. Additional bands around the wave show the expected range of price fluctuations, aiding traders in making informed decisions.
Customizing Parameters
You can fine-tune the model's appearance by adjusting these input parameters:
show Power Law (true/false): Toggle visibility of the power law trend line.
show Wave (true/false): Toggle visibility of the halving cycle wave.
show Rainbow Chart (true/false): Toggle visibility of the rainbow bands.
show Block Marks (true/false): Toggle visibility of the 70,000 block interval markers.
Using the Model in Your Trading Strategy
Combine this indicator with technical analysis, fundamental analysis, and risk management techniques to develop a comprehensive Bitcoin trading strategy. The model can help you identify potential entry and exit points, assess market sentiment, and manage risk based on Bitcoin's position relative to the power law trend, halving cycle wave, and rainbow chart zones.
Harmonic Rolling VWAP (Zeiierman)█ Overview
The Harmonic Rolling VWAP (Zeiierman) indicator combines the concept of the Rolling Volume Weighted Average Price (VWAP) with advanced harmonic analysis using Discrete Fourier Transform (DFT). This innovative indicator aims to provide traders with a dynamic view of price action, capturing both the volume-weighted price and underlying harmonic patterns. By leveraging this combination, traders can gain deeper insights into market trends and potential reversal points.
█ How It Works
The Harmonic Rolling VWAP calculates the rolling VWAP over a specified window of bars, giving more weight to periods with higher trading volume. This VWAP is then subjected to harmonic analysis using the Discrete Fourier Transform (DFT), which decomposes the VWAP into its frequency components.
Key Components:
Rolling VWAP (RVWAP): A moving average that gives more weight to higher volume periods, calculated over a user-defined window.
True Range (TR): Measures volatility by comparing the current high and low prices, considering the previous close price.
Discrete Fourier Transform (DFT): Analyzes the harmonic patterns within the RVWAP by decomposing it into its frequency components.
Standard Deviation Bands: These bands provide a visual representation of price volatility around the RVWAP, helping traders identify potential overbought or oversold conditions.
█ How to Use
Identify Trends: The RVWAP line helps in identifying the underlying trend by smoothing out short-term price fluctuations and focusing on volume-weighted prices.
Assess Volatility: The standard deviation bands around the RVWAP give a clear view of price volatility, helping traders identify potential breakout or breakdown points.
Find Entry and Exit Points: Traders can look for entries when the price is near the lower bands in an uptrend or near the upper bands in a downtrend. Exits can be considered when the price approaches the opposite bands or shows harmonic divergence.
█ Settings
VWAP Source: Defines the price data used for VWAP calculations. The source input defines the price data used for calculations. This setting affects the VWAP calculations and the resulting bands.
Window: Sets the number of bars used for the rolling calculations. The window input sets the number of bars used for the rolling calculations. A larger window smooths the VWAP and standard deviation bands, making the indicator less sensitive to short-term price fluctuations. A smaller window makes the indicator more responsive to recent price changes.
-----------------
Disclaimer
The information contained in my Scripts/Indicators/Ideas/Algos/Systems does not constitute financial advice or a solicitation to buy or sell any securities of any type. I will not accept liability for any loss or damage, including without limitation any loss of profit, which may arise directly or indirectly from the use of or reliance on such information.
All investments involve risk, and the past performance of a security, industry, sector, market, financial product, trading strategy, backtest, or individual's trading does not guarantee future results or returns. Investors are fully responsible for any investment decisions they make. Such decisions should be based solely on an evaluation of their financial circumstances, investment objectives, risk tolerance, and liquidity needs.
My Scripts/Indicators/Ideas/Algos/Systems are only for educational purposes!
Ichimoku Theories [LuxAlgo]The Ichimoku Theories indicator is the most complete Ichimoku tool you will ever need. Four tools combined into one to harness all the power of Ichimoku Kinkō Hyō.
This tool features the following concepts based on the work of Goichi Hosoda:
Ichimoku Kinkō Hyō: Original Ichimoku indicator with its five main lines and kumo.
Time Theory: automatic time cycle identification and forecasting to understand market timing.
Wave Theory: automatic wave identification to understand market structure.
Price Theory: automatic identification of developing N waves and possible price targets to understand future price behavior.
🔶 ICHIMOKU KINKŌ HYŌ
Ichimoku with lines only, Kumo only and both together
Let us start with the basics: the Ichimoku original indicator is a tool to understand the market, not to predict it, it is a trend-following tool, so it is best used in trending markets.
Ichimoku tells us what is happening in the market and what may happen next, the aim of the tool is to provide market understanding, not trading signals.
The tool is based on calculating the mid-point between the high and low of three pre-defined ranges as the equilibrium price for short (9 periods), medium (26 periods), and long (52 periods) time horizons:
Tenkan sen: middle point of the range of the last 9 candles
Kinjun sen: middle point of the range of the last 26 candles
Senkou span A: middle point between Tankan Sen and Kijun Sen, plotted 26 candles into the future
Senkou span B: midpoint of the range of the last 52 candles, plotted 26 candles into the future
Chikou span: closing price plotted 26 candles into the past
Kumo: area between Senkou pans A and B (kumo means cloud in Japanese)
The most basic use of the tool is to use the Kumo as an area of possible support or resistance.
🔶 TIME THEORY
Current cycles and forecast
Time theory is a critical concept used to identify historical and current market cycles, and use these to forecast the next ones. This concept is based on the Kihon Suchi (translating to "Basic Numbers" in Japanese), these are 9 and 26, and from their combinations we obtain the following sequence:
9, 17, 26, 33, 42, 51, 65, 76, 129, 172, 200, 257
The main idea is that the market moves in cycles with periods set by the Kihon Suchi sequence.
When the cycle has the same exact periods, we obtain the Taito Suchi (translating to "Same Number" in Japanese).
This tool allows traders to identify historical and current market cycles and forecast the next one.
🔹 Time Cycle Identification
Presentation of 4 different modes: SWINGS, HIGHS, KINJUN, and WAVES .
The tool draws a horizontal line at the bottom of the chart showing the cycles detected and their size.
The following settings are used:
Time Cycle Mode: up to 7 different modes
Wave Cycle: Which wave to use when WAVE mode is selected, only active waves in the Wave Theory settings will be used.
Show Time Cycles: keep a cleaner chart by disabling cycles visualisation
Show last X time cycles: how many cycles to display
🔹 Time Cycle Forecast
Showcasing the two forecasting patterns: Kihon Suchi and Taito Suchi
The tool plots horizontal lines, a solid anchor line, and several dotted forecast lines.
The following settings are used:
Show time cycle forecast: to keep things clean
Forecast Pattern: comes in two flavors
Kihon Suchi plots a line from the anchor at each number in the Kihon Suchi sequence.
Taito Suchi plot lines from the anchor with the same size detected in the anchored cycle
Anchor forecast on last X time cycle: traders can place the anchor in any detected cycle
🔶 WAVE THEORY
All waves activated with overlapping
The main idea behind this theory is that markets move like waves in the sea, back and forth (making swing lows and highs). Understanding the current market structure is key to having realistic expectations of what the market may do next. The waves are divided into Simple and Complex.
The following settings are used:
Basic Waves: allows traders to activate waves I, V and N
Complex Waves: allows traders to activate waves P, Y and W
Overlapping waves: to avoid missing out on any of the waves activated
Show last X waves: how many waves will be displayed
🔹 Basic Waves
The three basic waves
The basic waves from which all waves are made are I, V, and N
I wave: one leg moves
V wave: two legs move, one against the other
N wave: Three legs move, push, pull back, and another push
🔹 Complex Waves
Three complex waves
There are other waves like
P wave: contracting market
Y wave: expanding market
W wave: double top or double bottom
🔶 PRICE THEORY
All targets for the current N wave with their calculations
This theory is based on identifying developing N waves and predicting potential price targets based on that developing wave.
The tool displays 4 basic targets (V, E, N, and NT) and 3 extended targets (2E and 3E) according to the calculations shown in the chart above. Traders can enable or disable each target in the settings panel.
🔶 USING EVERYTHING TOGETHER
Please DON'T do this. This is not how you use it
Now the real example:
Daily chart of Nasdaq 100 futures (NQ1!) with our Ichimoku analysis
Time, waves, and price theories go together as one:
First, we identify the current time cycles and wave structure.
Then we forecast the next cycle and possible key price levels.
We identify a Taito Suchi with both legs of exactly 41 candles on each I wave, both together forming a V wave, the last two I waves are part of a developing N wave, and the time cycle of the first one is 191 candles. We forecast this cycle into the future and get 22nd April as a key date, so in 6 trading days (as of this writing) the market would have completed another Taito Suchi pattern if a new wave and time cycle starts. As we have a developing N wave we can see the potential price targets, the price is actually between the NT and V targets. We have a bullish Kumo and the price is touching it, if this Kumo provides enough support for the price to go further, the market could reach N or E targets.
So we have identified the cycle and wave, our expectations are that the current cycle is another Taito Suchi and the current wave is an N wave, the first I wave went for 191 candles, and we expect the second and third I waves together to amount to 191 candles, so in theory the N wave would complete in the next 6 trading days making a swing high. If this is indeed the case, the price could reach the V target (it is almost there) or even the N target if the bulls have the necessary strength.
We do not predict the future, we can only aim to understand the current market conditions and have future expectations of when (time), how (wave), and where (price) the market will make the next turning point where one side of the market overcomes the other (bulls vs bears).
To generate this chart, we change the following settings from the default ones:
Swing length: 64
Show lines: disabled
Forecast pattern: TAITO SUCHI
Anchor forecast: 2
Show last time cycles: 5
I WAVE: enabled
N WAVE: disabled
Show last waves: 5
🔶 SETTINGS
Show Swing Highs & Lows: Enable/Disable points on swing highs and swing lows.
Swing Length: Number of candles to confirm a swing high or swing low. A higher number detects larger swings.
🔹 Ichimoku Kinkō Hyō
Show Lines: Enable/Disable the 5 Ichimoku lines: Kijun sen, Tenkan sen, Senkou span A & B and Chikou Span.
Show Kumo: Enable/Disable the Kumo (cloud). The Kumo is formed by 2 lines: Senkou Span A and Senkou Span B.
Tenkan Sen Length: Number of candles for Tenkan Sen calculation.
Kinjun Sen Length: Number of candles for the Kijun Sen calculation.
Senkou Span B Length: Number of candles for Senkou Span B calculation.
Chikou & Senkou Offset: Number of candles for Chikou and Senkou Span calculation. Chikou Span is plotted in the past, and Senkou Span A & B in the future.
🔹 Time Theory
Show Time Cycle Forecast: Enable/Disable time cycle forecast vertical lines. Disable for better performance.
Forecast Pattern: Choose between two patterns: Kihon Suchi (basic numbers) or Taito Suchi (equal numbers).
Anchor forecast on last X time cycle: Number of time cycles in the past to anchor the time cycle forecast. The larger the number, the deeper in the past the anchor will be.
Time Cycle Mode: Choose from 7 time cycle detection modes: Tenkan Sen cross, Kijun Sen cross, Kumo change between bullish & bearish, swing highs only, swing lows only, both swing highs & lows and wave detection.
Wave Cycle: Choose which type of wave to detect from 6 different wave types when the time cycle mode is set to WAVES.
Show Time Cycles: Enable/Disable time cycle horizontal lines. Disable for better performance.
how last X time cycles: Maximum number of time cycles to display.
🔹 Wave Theory
Basic Waves: Enable/Disable the display of basic waves, all at once or one at a time. Disable for better performance.
Complex Waves: Enable/Disable complex wave display, all at once or one by one. Disable for better performance.
Overlapping Waves: Enable/Disable the display of waves ending on the same swing point.
Show last X waves: 'Maximum number of waves to display.
🔹 Price Theory
Basic Targets: Enable/Disable horizontal price target lines. Disable for better performance.
Extended Targets: Enable/Disable extended price target horizontal lines. Disable for better performance.
Unmitigated Liquidity Imbalances [AlgoAlpha]🎉 Introducing the Unmitigated Liquidity Imbalance Indicator by AlgoAlpha! 🎉
Dive into the depths of market analytics with our "Unmitigated Liquidity Imbalance" indicator. This tool harnesses unique algorithms to detect liquidity imbalances between bulls and bears, helping traders spot trends and potential entry and exit points with greater accuracy. 📈🚀
🔍 Key Features:
🌟 Advanced Analysis : Analyses candle direction and length to forecast market peaks and valleys.
🎨 Customizable Visuals : Tailor the chart with your choice of bullish green or bearish red to reflect different market conditions.
🔄 Real-Time Updates : Continuously updates to reflect live market changes.
🔔 Configurable Alerts : Set up alerts for key trading signals such as bullish and bearish reversals, as well as trend shifts.
📐 How to Use:
🛠 Add the Indicator : Add the indicator to your favourites and customize the settings to suite your needs.
📊 Market Analysis : Monitor the oscillator threshold; readings above 0.5 suggest bullish sentiment, while below 0.5 indicate bearish conditions. And reversal signals are displayed to show potential entry points.
🔔 Set Alerts : Enable notifications for reversal conditions or trend changes to seize trading opportunities without constant chart watching.
🧠 How It Works:
The core mechanism of the indicator is based on detecting changes in candlestick size and direction to identify bullish and bearish liquidity levels from the peak & valley indicator's logic. By comparing the length of a current candle to the previous one and checking the change in direction, it pinpoints moments where market sentiment could be shifting, indicating if the liquidity at that point is bullish or bearish. The script then looks at what percentage of the past few unmitigated levels are bullish or bearish based on a customizable lookback and determines the liquidity imbalance which can then be interpreted as trend.
Empower your trading with the Unmitigated Liquidity Imbalance indicator and navigate the markets with confidence and precision. 🌟💹
Happy trading, and may your charts be ever in your favour! 🥳✨
💎 Related Indicator
Smart Money Setup 04 [TradingFinder] Three Drive (Harmonic) + OB🔵 Introduction
The "Three Drive" pattern is a well-known formation in technical analysis, recognized for its ability to signal potential trend reversals in price action. Within the realm of trading, particularly in the context of "Reversal Patterns," the Three Drive pattern holds significance as a reliable indicator of shifts in market sentiment.
🟣 Bullish 3 Drive
This pattern typically manifests at a price bottom, where a sequence of lower lows suggests a prevailing negative trend. However, within the structure of the Three Drive pattern, a notable occurrence unfolds.
The second low breaches the range of the first low, followed by the third low surpassing the range of the second low. These penetrations signify a diminishing selling pressure and an emerging buying interest.
Traders often await the confirmation of the third low surpassing the second low as an entry point, with price targets set at the highs formed within the Three Drive pattern.
🟣 Bearish 3 Drive
Conversely, the Bearish Three Drive pattern emerges at a price top, characterized by a sequence of higher highs indicating an upward trend. Yet, amidst this apparent bullish momentum, a shift occurs.
The second high breaks beyond the range of the first high, succeeded by the third high exceeding the range of the second high. These breaches signify a waning buying strength and a resurgence in selling pressure.
Entry into a trade is often executed after the confirmation of the third high surpassing the second high, with targets set at the lows formed within the Three Drive pattern.
Importance :
Understanding the Three Drive pattern's significance extends beyond mere technical analysis. It bears resemblance to other established patterns, such as the Harmonic Pattern and Ending Diagonal within the Elliott Wave Theory.
Recognizing these parallels aids traders in comprehending broader market dynamics and potential price movements.
🔵 Formation of 3 Drive in Order Block Zone
The convergence of the Three Drive pattern with the concept of the Order Block Zone introduces a nuanced layer to traders' analytical approach.
In "Price Action" methodology, Order Blocks represent areas on the price chart where significant market players, such as institutional traders, have executed notable orders.
These zones often act as barriers, with price encountering resistance or support upon reaching them.
When the Three Drive pattern forms within an Order Block Zone, it signifies a confluence of market dynamics.
The completion of the pattern within this zone suggests a potential reversal in the prevailing trend, augmented by the presence of significant institutional orders.
Traders incorporate these Order Blocks into their analysis to identify probable levels where price may change direction, enhancing the reliability of their trading decisions.
🔵 How to Use :
To effectively utilize the Three Drive pattern within the Order Block Zone, traders seek alignment between the completion of the pattern and the presence of significant Order Blocks.
This convergence enhances the reliability of the pattern's signals, increasing the likelihood of successful trade outcomes.
Bullish Three Drive in Demand Zone :
Bearish Three Drive in Supply Zone :
Settings :
You can set your desired "Pivot Period" via settings for the indicator to identify setups based on it.
Bearish Cassiopeia C Harmonic Patterns [theEccentricTrader]█ OVERVIEW
This indicator automatically detects and draws bearish Cassiopeia C harmonic patterns and price projections derived from the ranges that constitute the patterns.
Cassiopeia A, B and C harmonic patterns are patterns that I created/discovered myself. They are all inspired by the Cassiopeia constellation and each one is based on different rotations of the constellation as it moves through the sky. The range ratios are also based on the constellation's right ascension and declination listed on Wikipedia:
Right ascension 22h 57m 04.5897s–03h 41m 14.0997s
Declination 77.6923447°–48.6632690°
en.wikipedia.org
I actually developed this idea quite a while ago now but have not felt audacious enough to introduce a new harmonic pattern, let alone 3 at the same time! But I have since been able to run backtests on tick data going back to 2002 across a variety of market and timeframe combinations and have learned that the Cassiopeia patterns can certainly hold their own against the currently known harmonic patterns.
I would also point out that the Cassiopeia constellation does actually look like a harmonic pattern and the Cassiopeia A star is literally the 'strongest source of radio emission in the sky beyond the solar system', so its arguably more of a real harmonic phenomenon than the current patterns.
www.britannica.com
chandra.si.edu
█ CONCEPTS
Green and Red Candles
• A green candle is one that closes with a close price equal to or above the price it opened.
• A red candle is one that closes with a close price that is lower than the price it opened.
Swing Highs and Swing Lows
• A swing high is a green candle or series of consecutive green candles followed by a single red candle to complete the swing and form the peak.
• A swing low is a red candle or series of consecutive red candles followed by a single green candle to complete the swing and form the trough.
Peak and Trough Prices (Basic)
• The peak price of a complete swing high is the high price of either the red candle that completes the swing high or the high price of the preceding green candle, depending on which is higher.
• The trough price of a complete swing low is the low price of either the green candle that completes the swing low or the low price of the preceding red candle, depending on which is lower.
Historic Peaks and Troughs
The current, or most recent, peak and trough occurrences are referred to as occurrence zero. Previous peak and trough occurrences are referred to as historic and ordered numerically from right to left, with the most recent historic peak and trough occurrences being occurrence one.
Range
The range is simply the difference between the current peak and current trough prices, generally expressed in terms of points or pips.
Upper Trends
• A return line uptrend is formed when the current peak price is higher than the preceding peak price.
• A downtrend is formed when the current peak price is lower than the preceding peak price.
• A double-top is formed when the current peak price is equal to the preceding peak price.
Lower Trends
• An uptrend is formed when the current trough price is higher than the preceding trough price.
• A return line downtrend is formed when the current trough price is lower than the preceding trough price.
• A double-bottom is formed when the current trough price is equal to the preceding trough price.
Muti-Part Upper and Lower Trends
• A multi-part return line uptrend begins with the formation of a new return line uptrend and continues until a new downtrend ends the trend.
• A multi-part downtrend begins with the formation of a new downtrend and continues until a new return line uptrend ends the trend.
• A multi-part uptrend begins with the formation of a new uptrend and continues until a new return line downtrend ends the trend.
• A multi-part return line downtrend begins with the formation of a new return line downtrend and continues until a new uptrend ends the trend.
Double Trends
• A double uptrend is formed when the current trough price is higher than the preceding trough price and the current peak price is higher than the preceding peak price.
• A double downtrend is formed when the current peak price is lower than the preceding peak price and the current trough price is lower than the preceding trough price.
Muti-Part Double Trends
• A multi-part double uptrend begins with the formation of a new uptrend that proceeds a new return line uptrend, and continues until a new downtrend or return line downtrend ends the trend.
• A multi-part double downtrend begins with the formation of a new downtrend that proceeds a new return line downtrend, and continues until a new uptrend or return line uptrend ends the trend.
Wave Cycles
A wave cycle is here defined as a complete two-part move between a swing high and a swing low, or a swing low and a swing high. The first swing high or swing low will set the course for the sequence of wave cycles that follow; for example a chart that begins with a swing low will form its first complete wave cycle upon the formation of the first complete swing high and vice versa.
Figure 1.
Retracement and Extension Ratios
Retracement and extension ratios are calculated by dividing the current range by the preceding range and multiplying the answer by 100. Retracement ratios are those that are equal to or below 100% of the preceding range and extension ratios are those that are above 100% of the preceding range.
Fibonacci Retracement and Extension Ratios
The Fibonacci sequence is a series of numbers in which each number is the sum of the two preceding numbers, starting with 0 and 1. For example 0 + 1 = 1, 1 + 1 = 2, 1 + 2 = 3, and so on. Ultimately, we could go on forever but the first few numbers in the sequence are as follows: 0 , 1, 1, 2, 3, 5, 8, 13, 21, 34, 55, 89, 144.
The extension ratios are calculated by dividing each number in the sequence by the number preceding it. For example 0/1 = 0, 1/1 = 1, 2/1 = 2, 3/2 = 1.5, 5/3 = 1.6666..., 8/5 = 1.6, 13/8 = 1.625, 21/13 = 1.6153..., 34/21 = 1.6190..., 55/34 = 1.6176..., 89/55 = 1.6181..., 144/89 = 1.6179..., and so on. The retracement ratios are calculated by inverting this process and dividing each number in the sequence by the number proceeding it. For example 0/1 = 0, 1/1 = 1, 1/2 = 0.5, 2/3 = 0.666..., 3/5 = 0.6, 5/8 = 0.625, 8/13 = 0.6153..., 13/21 = 0.6190..., 21/34 = 0.6176..., 34/55 = 0.6181..., 55/89 = 0.6179..., 89/144 = 0.6180..., and so on.
1.618 is considered to be the 'golden ratio', found in many natural phenomena such as the growth of seashells and the branching of trees. Some now speculate the universe oscillates at a frequency of 0,618 Hz, which could help to explain such phenomena, but this theory has yet to be proven.
Traders and analysts use Fibonacci retracement and extension indicators, consisting of horizontal lines representing different Fibonacci ratios, for identifying potential levels of support and resistance. Fibonacci ranges are typically drawn from left to right, with retracement levels representing ratios inside of the current range and extension levels representing ratios extended outside of the current range. If the current wave cycle ends on a swing low, the Fibonacci range is drawn from peak to trough. If the current wave cycle ends on a swing high the Fibonacci range is drawn from trough to peak.
Harmonic Patterns
The concept of harmonic patterns in trading was first introduced by H.M. Gartley in his book "Profits in the Stock Market", published in 1935. Gartley observed that markets have a tendency to move in repetitive patterns, and he identified several specific patterns that he believed could be used to predict future price movements.
Since then, many other traders and analysts have built upon Gartley's work and developed their own variations of harmonic patterns. One such contributor is Larry Pesavento, who developed his own methods for measuring harmonic patterns using Fibonacci ratios. Pesavento has written several books on the subject of harmonic patterns and Fibonacci ratios in trading. Another notable contributor to harmonic patterns is Scott Carney, who developed his own approach to harmonic trading in the late 1990s and also popularised the use of Fibonacci ratios to measure harmonic patterns. Carney expanded on Gartley's work and also introduced several new harmonic patterns, such as the Shark pattern and the 5-0 pattern.
The bullish and bearish Gartley patterns are the oldest recognized harmonic patterns in trading and all the other harmonic patterns are ultimately modifications of the original Gartley patterns. Gartley patterns are fundamentally composed of 5 points, or 4 waves.
Bullish and Bearish Cassiopeia C Harmonic Patterns
• Bullish Cassiopeia C patterns are fundamentally composed of three troughs and two peaks. The second peak being higher than the first peak. And the third trough being lower than both the first and second troughs, while the second trough is higher than the first.
• Bearish Cassiopeia C patterns are fundamentally composed of three peaks and two troughs. The second trough being lower than the first trough. And the third peak being higher than both the first and second peaks, while the second peak is lower than the first.
The ratio measurements I use to detect the patterns are as follows:
• Wave 1 of the pattern, generally referred to as XA, has no specific ratio requirements.
• Wave 2 of the pattern, generally referred to as AB, should retrace by at least 11.34%, but no further than 22.31% of the range set by wave 1.
• Wave 3 of the pattern, generally referred to as BC, should extend by at least 225.7%, but no further than 341% of the range set by wave 2.
• Wave 4 of the pattern, generally referred to as CD, should retrace by at least 77.69%, but no further than 88.66% of the range set by wave 3.
Measurement Tolerances
In general, tolerance in measurements refers to the allowable variation or deviation from a specific value or dimension. It is the range within which a particular measurement is considered to be acceptable or accurate. In this script I have applied this concept to the measurement of harmonic pattern ratios to increase to the frequency of pattern occurrences.
For example, the AB measurement of Gartley patterns is generally set at around 61.8%, but with such specificity in the measuring requirements the patterns are very rare. We can increase the frequency of pattern occurrences by setting a tolerance. A tolerance of 10% to both downside and upside, which is the default setting for all tolerances, means we would have a tolerable measurement range between 51.8-71.8%, thus increasing the frequency of occurrence.
█ FEATURES
Inputs
• AB Lower Tolerance
• AB Upper Tolerance
• BC Lower Tolerance
• BC Upper Tolerance
• CD Lower Tolerance
• CD Upper Tolerance
• Pattern Color
• Label Color
• Show Projections
• Extend Current Projection Lines
Alerts
Users can set alerts for when the patterns occur.
█ LIMITATIONS
All green and red candle calculations are based on differences between open and close prices, as such I have made no attempt to account for green candles that gap lower and close below the close price of the preceding candle, or red candles that gap higher and close above the close price of the preceding candle. This may cause some unexpected behaviour on some markets and timeframes. I can only recommend using 24-hour markets, if and where possible, as there are far fewer gaps and, generally, more data to work with.
█ NOTES
I know a few people have been requesting a single indicator that contains all my patterns and I definitely hear you on that one. However, I have been very busy working on other projects while trying to trade and be a human at the same time. For now I am going to maintain my original approach of releasing each pattern individually so as to maintain consistency. But I am now also working on getting my some of my libraries ready for public release and in doing so I will finally be able to fit all patterns into one script. I will also be giving my scripts some TLC by making them cleaner once I have the libraries up and running. Please bear with me in the meantime, this may take a while. Cheers!
Bullish Cassiopeia C Harmonic Patterns [theEccentricTrader]█ OVERVIEW
This indicator automatically detects and draws bullish Cassiopeia C harmonic patterns and price projections derived from the ranges that constitute the patterns.
Cassiopeia A, B and C harmonic patterns are patterns that I created/discovered myself. They are all inspired by the Cassiopeia constellation and each one is based on different rotations of the constellation as it moves through the sky. The range ratios are also based on the constellation's right ascension and declination listed on Wikipedia:
Right ascension 22h 57m 04.5897s–03h 41m 14.0997s
Declination 77.6923447°–48.6632690°
en.wikipedia.org
I actually developed this idea quite a while ago now but have not felt audacious enough to introduce a new harmonic pattern, let alone 3 at the same time! But I have since been able to run backtests on tick data going back to 2002 across a variety of market and timeframe combinations and have learned that the Cassiopeia patterns can certainly hold their own against the currently known harmonic patterns.
I would also point out that the Cassiopeia constellation does actually look like a harmonic pattern and the Cassiopeia A star is literally the 'strongest source of radio emission in the sky beyond the solar system', so its arguably more of a real harmonic phenomenon than the current patterns.
www.britannica.com
chandra.si.edu
█ CONCEPTS
Green and Red Candles
• A green candle is one that closes with a close price equal to or above the price it opened.
• A red candle is one that closes with a close price that is lower than the price it opened.
Swing Highs and Swing Lows
• A swing high is a green candle or series of consecutive green candles followed by a single red candle to complete the swing and form the peak.
• A swing low is a red candle or series of consecutive red candles followed by a single green candle to complete the swing and form the trough.
Peak and Trough Prices (Basic)
• The peak price of a complete swing high is the high price of either the red candle that completes the swing high or the high price of the preceding green candle, depending on which is higher.
• The trough price of a complete swing low is the low price of either the green candle that completes the swing low or the low price of the preceding red candle, depending on which is lower.
Historic Peaks and Troughs
The current, or most recent, peak and trough occurrences are referred to as occurrence zero. Previous peak and trough occurrences are referred to as historic and ordered numerically from right to left, with the most recent historic peak and trough occurrences being occurrence one.
Range
The range is simply the difference between the current peak and current trough prices, generally expressed in terms of points or pips.
Upper Trends
• A return line uptrend is formed when the current peak price is higher than the preceding peak price.
• A downtrend is formed when the current peak price is lower than the preceding peak price.
• A double-top is formed when the current peak price is equal to the preceding peak price.
Lower Trends
• An uptrend is formed when the current trough price is higher than the preceding trough price.
• A return line downtrend is formed when the current trough price is lower than the preceding trough price.
• A double-bottom is formed when the current trough price is equal to the preceding trough price.
Muti-Part Upper and Lower Trends
• A multi-part return line uptrend begins with the formation of a new return line uptrend and continues until a new downtrend ends the trend.
• A multi-part downtrend begins with the formation of a new downtrend and continues until a new return line uptrend ends the trend.
• A multi-part uptrend begins with the formation of a new uptrend and continues until a new return line downtrend ends the trend.
• A multi-part return line downtrend begins with the formation of a new return line downtrend and continues until a new uptrend ends the trend.
Double Trends
• A double uptrend is formed when the current trough price is higher than the preceding trough price and the current peak price is higher than the preceding peak price.
• A double downtrend is formed when the current peak price is lower than the preceding peak price and the current trough price is lower than the preceding trough price.
Muti-Part Double Trends
• A multi-part double uptrend begins with the formation of a new uptrend that proceeds a new return line uptrend, and continues until a new downtrend or return line downtrend ends the trend.
• A multi-part double downtrend begins with the formation of a new downtrend that proceeds a new return line downtrend, and continues until a new uptrend or return line uptrend ends the trend.
Wave Cycles
A wave cycle is here defined as a complete two-part move between a swing high and a swing low, or a swing low and a swing high. The first swing high or swing low will set the course for the sequence of wave cycles that follow; for example a chart that begins with a swing low will form its first complete wave cycle upon the formation of the first complete swing high and vice versa.
Figure 1.
Retracement and Extension Ratios
Retracement and extension ratios are calculated by dividing the current range by the preceding range and multiplying the answer by 100. Retracement ratios are those that are equal to or below 100% of the preceding range and extension ratios are those that are above 100% of the preceding range.
Fibonacci Retracement and Extension Ratios
The Fibonacci sequence is a series of numbers in which each number is the sum of the two preceding numbers, starting with 0 and 1. For example 0 + 1 = 1, 1 + 1 = 2, 1 + 2 = 3, and so on. Ultimately, we could go on forever but the first few numbers in the sequence are as follows: 0 , 1, 1, 2, 3, 5, 8, 13, 21, 34, 55, 89, 144.
The extension ratios are calculated by dividing each number in the sequence by the number preceding it. For example 0/1 = 0, 1/1 = 1, 2/1 = 2, 3/2 = 1.5, 5/3 = 1.6666..., 8/5 = 1.6, 13/8 = 1.625, 21/13 = 1.6153..., 34/21 = 1.6190..., 55/34 = 1.6176..., 89/55 = 1.6181..., 144/89 = 1.6179..., and so on. The retracement ratios are calculated by inverting this process and dividing each number in the sequence by the number proceeding it. For example 0/1 = 0, 1/1 = 1, 1/2 = 0.5, 2/3 = 0.666..., 3/5 = 0.6, 5/8 = 0.625, 8/13 = 0.6153..., 13/21 = 0.6190..., 21/34 = 0.6176..., 34/55 = 0.6181..., 55/89 = 0.6179..., 89/144 = 0.6180..., and so on.
1.618 is considered to be the 'golden ratio', found in many natural phenomena such as the growth of seashells and the branching of trees. Some now speculate the universe oscillates at a frequency of 0,618 Hz, which could help to explain such phenomena, but this theory has yet to be proven.
Traders and analysts use Fibonacci retracement and extension indicators, consisting of horizontal lines representing different Fibonacci ratios, for identifying potential levels of support and resistance. Fibonacci ranges are typically drawn from left to right, with retracement levels representing ratios inside of the current range and extension levels representing ratios extended outside of the current range. If the current wave cycle ends on a swing low, the Fibonacci range is drawn from peak to trough. If the current wave cycle ends on a swing high the Fibonacci range is drawn from trough to peak.
Harmonic Patterns
The concept of harmonic patterns in trading was first introduced by H.M. Gartley in his book "Profits in the Stock Market", published in 1935. Gartley observed that markets have a tendency to move in repetitive patterns, and he identified several specific patterns that he believed could be used to predict future price movements.
Since then, many other traders and analysts have built upon Gartley's work and developed their own variations of harmonic patterns. One such contributor is Larry Pesavento, who developed his own methods for measuring harmonic patterns using Fibonacci ratios. Pesavento has written several books on the subject of harmonic patterns and Fibonacci ratios in trading. Another notable contributor to harmonic patterns is Scott Carney, who developed his own approach to harmonic trading in the late 1990s and also popularised the use of Fibonacci ratios to measure harmonic patterns. Carney expanded on Gartley's work and also introduced several new harmonic patterns, such as the Shark pattern and the 5-0 pattern.
The bullish and bearish Gartley patterns are the oldest recognized harmonic patterns in trading and all the other harmonic patterns are ultimately modifications of the original Gartley patterns. Gartley patterns are fundamentally composed of 5 points, or 4 waves.
Bullish and Bearish Cassiopeia C Harmonic Patterns
• Bullish Cassiopeia C patterns are fundamentally composed of three troughs and two peaks. The second peak being higher than the first peak. And the third trough being lower than both the first and second troughs, while the second trough is higher than the first.
• Bearish Cassiopeia C patterns are fundamentally composed of three peaks and two troughs. The second trough being lower than the first trough. And the third peak being higher than both the first and second peaks, while the second peak is lower than the first.
The ratio measurements I use to detect the patterns are as follows:
• Wave 1 of the pattern, generally referred to as XA, has no specific ratio requirements.
• Wave 2 of the pattern, generally referred to as AB, should retrace by at least 11.34%, but no further than 22.31% of the range set by wave 1.
• Wave 3 of the pattern, generally referred to as BC, should extend by at least 225.7%, but no further than 341% of the range set by wave 2.
• Wave 4 of the pattern, generally referred to as CD, should retrace by at least 77.69%, but no further than 88.66% of the range set by wave 3.
Measurement Tolerances
In general, tolerance in measurements refers to the allowable variation or deviation from a specific value or dimension. It is the range within which a particular measurement is considered to be acceptable or accurate. In this script I have applied this concept to the measurement of harmonic pattern ratios to increase to the frequency of pattern occurrences.
For example, the AB measurement of Gartley patterns is generally set at around 61.8%, but with such specificity in the measuring requirements the patterns are very rare. We can increase the frequency of pattern occurrences by setting a tolerance. A tolerance of 10% to both downside and upside, which is the default setting for all tolerances, means we would have a tolerable measurement range between 51.8-71.8%, thus increasing the frequency of occurrence.
█ FEATURES
Inputs
• AB Lower Tolerance
• AB Upper Tolerance
• BC Lower Tolerance
• BC Upper Tolerance
• CD Lower Tolerance
• CD Upper Tolerance
• Pattern Color
• Label Color
• Show Projections
• Extend Current Projection Lines
Alerts
Users can set alerts for when the patterns occur.
█ LIMITATIONS
All green and red candle calculations are based on differences between open and close prices, as such I have made no attempt to account for green candles that gap lower and close below the close price of the preceding candle, or red candles that gap higher and close above the close price of the preceding candle. This may cause some unexpected behaviour on some markets and timeframes. I can only recommend using 24-hour markets, if and where possible, as there are far fewer gaps and, generally, more data to work with.
█ NOTES
I know a few people have been requesting a single indicator that contains all my patterns and I definitely hear you on that one. However, I have been very busy working on other projects while trying to trade and be a human at the same time. For now I am going to maintain my original approach of releasing each pattern individually so as to maintain consistency. But I am now also working on getting my some of my libraries ready for public release and in doing so I will finally be able to fit all patterns into one script. I will also be giving my scripts some TLC by making them cleaner once I have the libraries up and running. Please bear with me in the meantime, this may take a while. Cheers!
Bearish Cassiopeia B Harmonic Patterns [theEccentricTrader]█ OVERVIEW
This indicator automatically detects and draws bearish Cassiopeia B harmonic patterns and price projections derived from the ranges that constitute the patterns.
Cassiopeia A, B and C harmonic patterns are patterns that I created/discovered myself. They are all inspired by the Cassiopeia constellation and each one is based on different rotations of the constellation as it moves through the sky. The range ratios are also based on the constellation's right ascension and declination listed on Wikipedia:
Right ascension 22h 57m 04.5897s–03h 41m 14.0997s
Declination 77.6923447°–48.6632690°
en.wikipedia.org
I actually developed this idea quite a while ago now but have not felt audacious enough to introduce a new harmonic pattern, let alone 3 at the same time! But I have since been able to run backtests on tick data going back to 2002 across a variety of market and timeframe combinations and have learned that the Cassiopeia patterns can certainly hold their own against the currently known harmonic patterns.
I would also point out that the Cassiopeia constellation does actually look like a harmonic pattern and the Cassiopeia A star is literally the 'strongest source of radio emission in the sky beyond the solar system', so its arguably more of a real harmonic phenomenon than the current patterns.
www.britannica.com
chandra.si.edu
█ CONCEPTS
Green and Red Candles
• A green candle is one that closes with a close price equal to or above the price it opened.
• A red candle is one that closes with a close price that is lower than the price it opened.
Swing Highs and Swing Lows
• A swing high is a green candle or series of consecutive green candles followed by a single red candle to complete the swing and form the peak.
• A swing low is a red candle or series of consecutive red candles followed by a single green candle to complete the swing and form the trough.
Peak and Trough Prices (Basic)
• The peak price of a complete swing high is the high price of either the red candle that completes the swing high or the high price of the preceding green candle, depending on which is higher.
• The trough price of a complete swing low is the low price of either the green candle that completes the swing low or the low price of the preceding red candle, depending on which is lower.
Historic Peaks and Troughs
The current, or most recent, peak and trough occurrences are referred to as occurrence zero. Previous peak and trough occurrences are referred to as historic and ordered numerically from right to left, with the most recent historic peak and trough occurrences being occurrence one.
Range
The range is simply the difference between the current peak and current trough prices, generally expressed in terms of points or pips.
Upper Trends
• A return line uptrend is formed when the current peak price is higher than the preceding peak price.
• A downtrend is formed when the current peak price is lower than the preceding peak price.
• A double-top is formed when the current peak price is equal to the preceding peak price.
Lower Trends
• An uptrend is formed when the current trough price is higher than the preceding trough price.
• A return line downtrend is formed when the current trough price is lower than the preceding trough price.
• A double-bottom is formed when the current trough price is equal to the preceding trough price.
Muti-Part Upper and Lower Trends
• A multi-part return line uptrend begins with the formation of a new return line uptrend and continues until a new downtrend ends the trend.
• A multi-part downtrend begins with the formation of a new downtrend and continues until a new return line uptrend ends the trend.
• A multi-part uptrend begins with the formation of a new uptrend and continues until a new return line downtrend ends the trend.
• A multi-part return line downtrend begins with the formation of a new return line downtrend and continues until a new uptrend ends the trend.
Double Trends
• A double uptrend is formed when the current trough price is higher than the preceding trough price and the current peak price is higher than the preceding peak price.
• A double downtrend is formed when the current peak price is lower than the preceding peak price and the current trough price is lower than the preceding trough price.
Muti-Part Double Trends
• A multi-part double uptrend begins with the formation of a new uptrend that proceeds a new return line uptrend, and continues until a new downtrend or return line downtrend ends the trend.
• A multi-part double downtrend begins with the formation of a new downtrend that proceeds a new return line downtrend, and continues until a new uptrend or return line uptrend ends the trend.
Wave Cycles
A wave cycle is here defined as a complete two-part move between a swing high and a swing low, or a swing low and a swing high. The first swing high or swing low will set the course for the sequence of wave cycles that follow; for example a chart that begins with a swing low will form its first complete wave cycle upon the formation of the first complete swing high and vice versa.
Figure 1.
Retracement and Extension Ratios
Retracement and extension ratios are calculated by dividing the current range by the preceding range and multiplying the answer by 100. Retracement ratios are those that are equal to or below 100% of the preceding range and extension ratios are those that are above 100% of the preceding range.
Fibonacci Retracement and Extension Ratios
The Fibonacci sequence is a series of numbers in which each number is the sum of the two preceding numbers, starting with 0 and 1. For example 0 + 1 = 1, 1 + 1 = 2, 1 + 2 = 3, and so on. Ultimately, we could go on forever but the first few numbers in the sequence are as follows: 0 , 1, 1, 2, 3, 5, 8, 13, 21, 34, 55, 89, 144.
The extension ratios are calculated by dividing each number in the sequence by the number preceding it. For example 0/1 = 0, 1/1 = 1, 2/1 = 2, 3/2 = 1.5, 5/3 = 1.6666..., 8/5 = 1.6, 13/8 = 1.625, 21/13 = 1.6153..., 34/21 = 1.6190..., 55/34 = 1.6176..., 89/55 = 1.6181..., 144/89 = 1.6179..., and so on. The retracement ratios are calculated by inverting this process and dividing each number in the sequence by the number proceeding it. For example 0/1 = 0, 1/1 = 1, 1/2 = 0.5, 2/3 = 0.666..., 3/5 = 0.6, 5/8 = 0.625, 8/13 = 0.6153..., 13/21 = 0.6190..., 21/34 = 0.6176..., 34/55 = 0.6181..., 55/89 = 0.6179..., 89/144 = 0.6180..., and so on.
1.618 is considered to be the 'golden ratio', found in many natural phenomena such as the growth of seashells and the branching of trees. Some now speculate the universe oscillates at a frequency of 0,618 Hz, which could help to explain such phenomena, but this theory has yet to be proven.
Traders and analysts use Fibonacci retracement and extension indicators, consisting of horizontal lines representing different Fibonacci ratios, for identifying potential levels of support and resistance. Fibonacci ranges are typically drawn from left to right, with retracement levels representing ratios inside of the current range and extension levels representing ratios extended outside of the current range. If the current wave cycle ends on a swing low, the Fibonacci range is drawn from peak to trough. If the current wave cycle ends on a swing high the Fibonacci range is drawn from trough to peak.
Harmonic Patterns
The concept of harmonic patterns in trading was first introduced by H.M. Gartley in his book "Profits in the Stock Market", published in 1935. Gartley observed that markets have a tendency to move in repetitive patterns, and he identified several specific patterns that he believed could be used to predict future price movements.
Since then, many other traders and analysts have built upon Gartley's work and developed their own variations of harmonic patterns. One such contributor is Larry Pesavento, who developed his own methods for measuring harmonic patterns using Fibonacci ratios. Pesavento has written several books on the subject of harmonic patterns and Fibonacci ratios in trading. Another notable contributor to harmonic patterns is Scott Carney, who developed his own approach to harmonic trading in the late 1990s and also popularised the use of Fibonacci ratios to measure harmonic patterns. Carney expanded on Gartley's work and also introduced several new harmonic patterns, such as the Shark pattern and the 5-0 pattern.
The bullish and bearish Gartley patterns are the oldest recognized harmonic patterns in trading and all the other harmonic patterns are ultimately modifications of the original Gartley patterns. Gartley patterns are fundamentally composed of 5 points, or 4 waves.
Bullish and Bearish Cassiopeia B Harmonic Patterns
• Bullish Cassiopeia B patterns are fundamentally composed of three troughs and two peaks. The second peak being lower than the first peak. And the third trough being lower than both the first and second troughs, while the second trough is also lower than the first.
• Bearish Cassiopeia B patterns are fundamentally composed of three peaks and two troughs. The second trough being higher than the first trough. And the third peak being higher than both the first and second peaks, while the second peak is also higher than the first.
The ratio measurements I use to detect the patterns are as follows:
• Wave 1 of the pattern, generally referred to as XA, has no specific ratio requirements.
• Wave 2 of the pattern, generally referred to as AB, should retrace by at least 11.34%, but no further than 22.31% of the range set by wave 1.
• Wave 3 of the pattern, generally referred to as BC, should extend by at least 225.7%, but no further than 341% of the range set by wave 2.
• Wave 4 of the pattern, generally referred to as CD, should retrace by at least 77.69%, but no further than 88.66% of the range set by wave 3.
Measurement Tolerances
In general, tolerance in measurements refers to the allowable variation or deviation from a specific value or dimension. It is the range within which a particular measurement is considered to be acceptable or accurate. In this script I have applied this concept to the measurement of harmonic pattern ratios to increase to the frequency of pattern occurrences.
For example, the AB measurement of Gartley patterns is generally set at around 61.8%, but with such specificity in the measuring requirements the patterns are very rare. We can increase the frequency of pattern occurrences by setting a tolerance. A tolerance of 10% to both downside and upside, which is the default setting for all tolerances, means we would have a tolerable measurement range between 51.8-71.8%, thus increasing the frequency of occurrence.
█ FEATURES
Inputs
• AB Lower Tolerance
• AB Upper Tolerance
• BC Lower Tolerance
• BC Upper Tolerance
• CD Lower Tolerance
• CD Upper Tolerance
• Pattern Color
• Label Color
• Show Projections
• Extend Current Projection Lines
Alerts
Users can set alerts for when the patterns occur.
█ LIMITATIONS
All green and red candle calculations are based on differences between open and close prices, as such I have made no attempt to account for green candles that gap lower and close below the close price of the preceding candle, or red candles that gap higher and close above the close price of the preceding candle. This may cause some unexpected behaviour on some markets and timeframes. I can only recommend using 24-hour markets, if and where possible, as there are far fewer gaps and, generally, more data to work with.
█ NOTES
I know a few people have been requesting a single indicator that contains all my patterns and I definitely hear you on that one. However, I have been very busy working on other projects while trying to trade and be a human at the same time. For now I am going to maintain my original approach of releasing each pattern individually so as to maintain consistency. But I am now also working on getting my some of my libraries ready for public release and in doing so I will finally be able to fit all patterns into one script. I will also be giving my scripts some TLC by making them cleaner once I have the libraries up and running. Please bear with me in the meantime, this may take a while. Cheers!
Bullish Cassiopeia B Harmonic Patterns [theEccentricTrader]█ OVERVIEW
This indicator automatically detects and draws bullish Cassiopeia B harmonic patterns and price projections derived from the ranges that constitute the patterns.
Cassiopeia A, B and C harmonic patterns are patterns that I created/discovered myself. They are all inspired by the Cassiopeia constellation and each one is based on different rotations of the constellation as it moves through the sky. The range ratios are also based on the constellation's right ascension and declination listed on Wikipedia:
Right ascension 22h 57m 04.5897s–03h 41m 14.0997s
Declination 77.6923447°–48.6632690°
en.wikipedia.org
I actually developed this idea quite a while ago now but have not felt audacious enough to introduce a new harmonic pattern, let alone 3 at the same time! But I have since been able to run backtests on tick data going back to 2002 across a variety of market and timeframe combinations and have learned that the Cassiopeia patterns can certainly hold their own against the currently known harmonic patterns.
I would also point out that the Cassiopeia constellation does actually look like a harmonic pattern and the Cassiopeia A star is literally the 'strongest source of radio emission in the sky beyond the solar system', so its arguably more of a real harmonic phenomenon than the current patterns.
www.britannica.com
chandra.si.edu
█ CONCEPTS
Green and Red Candles
• A green candle is one that closes with a close price equal to or above the price it opened.
• A red candle is one that closes with a close price that is lower than the price it opened.
Swing Highs and Swing Lows
• A swing high is a green candle or series of consecutive green candles followed by a single red candle to complete the swing and form the peak.
• A swing low is a red candle or series of consecutive red candles followed by a single green candle to complete the swing and form the trough.
Peak and Trough Prices (Basic)
• The peak price of a complete swing high is the high price of either the red candle that completes the swing high or the high price of the preceding green candle, depending on which is higher.
• The trough price of a complete swing low is the low price of either the green candle that completes the swing low or the low price of the preceding red candle, depending on which is lower.
Historic Peaks and Troughs
The current, or most recent, peak and trough occurrences are referred to as occurrence zero. Previous peak and trough occurrences are referred to as historic and ordered numerically from right to left, with the most recent historic peak and trough occurrences being occurrence one.
Range
The range is simply the difference between the current peak and current trough prices, generally expressed in terms of points or pips.
Upper Trends
• A return line uptrend is formed when the current peak price is higher than the preceding peak price.
• A downtrend is formed when the current peak price is lower than the preceding peak price.
• A double-top is formed when the current peak price is equal to the preceding peak price.
Lower Trends
• An uptrend is formed when the current trough price is higher than the preceding trough price.
• A return line downtrend is formed when the current trough price is lower than the preceding trough price.
• A double-bottom is formed when the current trough price is equal to the preceding trough price.
Muti-Part Upper and Lower Trends
• A multi-part return line uptrend begins with the formation of a new return line uptrend and continues until a new downtrend ends the trend.
• A multi-part downtrend begins with the formation of a new downtrend and continues until a new return line uptrend ends the trend.
• A multi-part uptrend begins with the formation of a new uptrend and continues until a new return line downtrend ends the trend.
• A multi-part return line downtrend begins with the formation of a new return line downtrend and continues until a new uptrend ends the trend.
Double Trends
• A double uptrend is formed when the current trough price is higher than the preceding trough price and the current peak price is higher than the preceding peak price.
• A double downtrend is formed when the current peak price is lower than the preceding peak price and the current trough price is lower than the preceding trough price.
Muti-Part Double Trends
• A multi-part double uptrend begins with the formation of a new uptrend that proceeds a new return line uptrend, and continues until a new downtrend or return line downtrend ends the trend.
• A multi-part double downtrend begins with the formation of a new downtrend that proceeds a new return line downtrend, and continues until a new uptrend or return line uptrend ends the trend.
Wave Cycles
A wave cycle is here defined as a complete two-part move between a swing high and a swing low, or a swing low and a swing high. The first swing high or swing low will set the course for the sequence of wave cycles that follow; for example a chart that begins with a swing low will form its first complete wave cycle upon the formation of the first complete swing high and vice versa.
Figure 1.
Retracement and Extension Ratios
Retracement and extension ratios are calculated by dividing the current range by the preceding range and multiplying the answer by 100. Retracement ratios are those that are equal to or below 100% of the preceding range and extension ratios are those that are above 100% of the preceding range.
Fibonacci Retracement and Extension Ratios
The Fibonacci sequence is a series of numbers in which each number is the sum of the two preceding numbers, starting with 0 and 1. For example 0 + 1 = 1, 1 + 1 = 2, 1 + 2 = 3, and so on. Ultimately, we could go on forever but the first few numbers in the sequence are as follows: 0 , 1, 1, 2, 3, 5, 8, 13, 21, 34, 55, 89, 144.
The extension ratios are calculated by dividing each number in the sequence by the number preceding it. For example 0/1 = 0, 1/1 = 1, 2/1 = 2, 3/2 = 1.5, 5/3 = 1.6666..., 8/5 = 1.6, 13/8 = 1.625, 21/13 = 1.6153..., 34/21 = 1.6190..., 55/34 = 1.6176..., 89/55 = 1.6181..., 144/89 = 1.6179..., and so on. The retracement ratios are calculated by inverting this process and dividing each number in the sequence by the number proceeding it. For example 0/1 = 0, 1/1 = 1, 1/2 = 0.5, 2/3 = 0.666..., 3/5 = 0.6, 5/8 = 0.625, 8/13 = 0.6153..., 13/21 = 0.6190..., 21/34 = 0.6176..., 34/55 = 0.6181..., 55/89 = 0.6179..., 89/144 = 0.6180..., and so on.
1.618 is considered to be the 'golden ratio', found in many natural phenomena such as the growth of seashells and the branching of trees. Some now speculate the universe oscillates at a frequency of 0,618 Hz, which could help to explain such phenomena, but this theory has yet to be proven.
Traders and analysts use Fibonacci retracement and extension indicators, consisting of horizontal lines representing different Fibonacci ratios, for identifying potential levels of support and resistance. Fibonacci ranges are typically drawn from left to right, with retracement levels representing ratios inside of the current range and extension levels representing ratios extended outside of the current range. If the current wave cycle ends on a swing low, the Fibonacci range is drawn from peak to trough. If the current wave cycle ends on a swing high the Fibonacci range is drawn from trough to peak.
Harmonic Patterns
The concept of harmonic patterns in trading was first introduced by H.M. Gartley in his book "Profits in the Stock Market", published in 1935. Gartley observed that markets have a tendency to move in repetitive patterns, and he identified several specific patterns that he believed could be used to predict future price movements.
Since then, many other traders and analysts have built upon Gartley's work and developed their own variations of harmonic patterns. One such contributor is Larry Pesavento, who developed his own methods for measuring harmonic patterns using Fibonacci ratios. Pesavento has written several books on the subject of harmonic patterns and Fibonacci ratios in trading. Another notable contributor to harmonic patterns is Scott Carney, who developed his own approach to harmonic trading in the late 1990s and also popularised the use of Fibonacci ratios to measure harmonic patterns. Carney expanded on Gartley's work and also introduced several new harmonic patterns, such as the Shark pattern and the 5-0 pattern.
The bullish and bearish Gartley patterns are the oldest recognized harmonic patterns in trading and all the other harmonic patterns are ultimately modifications of the original Gartley patterns. Gartley patterns are fundamentally composed of 5 points, or 4 waves.
Bullish and Bearish Cassiopeia B Harmonic Patterns
• Bullish Cassiopeia B patterns are fundamentally composed of three troughs and two peaks. The second peak being lower than the first peak. And the third trough being lower than both the first and second troughs, while the second trough is also lower than the first.
• Bearish Cassiopeia B patterns are fundamentally composed of three peaks and two troughs. The second trough being higher than the first trough. And the third peak being higher than both the first and second peaks, while the second peak is also higher than the first.
The ratio measurements I use to detect the patterns are as follows:
• Wave 1 of the pattern, generally referred to as XA, has no specific ratio requirements.
• Wave 2 of the pattern, generally referred to as AB, should retrace by at least 11.34%, but no further than 22.31% of the range set by wave 1.
• Wave 3 of the pattern, generally referred to as BC, should extend by at least 225.7%, but no further than 341% of the range set by wave 2.
• Wave 4 of the pattern, generally referred to as CD, should retrace by at least 77.69%, but no further than 88.66% of the range set by wave 3.
Measurement Tolerances
In general, tolerance in measurements refers to the allowable variation or deviation from a specific value or dimension. It is the range within which a particular measurement is considered to be acceptable or accurate. In this script I have applied this concept to the measurement of harmonic pattern ratios to increase to the frequency of pattern occurrences.
For example, the AB measurement of Gartley patterns is generally set at around 61.8%, but with such specificity in the measuring requirements the patterns are very rare. We can increase the frequency of pattern occurrences by setting a tolerance. A tolerance of 10% to both downside and upside, which is the default setting for all tolerances, means we would have a tolerable measurement range between 51.8-71.8%, thus increasing the frequency of occurrence.
█ FEATURES
Inputs
• AB Lower Tolerance
• AB Upper Tolerance
• BC Lower Tolerance
• BC Upper Tolerance
• CD Lower Tolerance
• CD Upper Tolerance
• Pattern Color
• Label Color
• Show Projections
• Extend Current Projection Lines
Alerts
Users can set alerts for when the patterns occur.
█ LIMITATIONS
All green and red candle calculations are based on differences between open and close prices, as such I have made no attempt to account for green candles that gap lower and close below the close price of the preceding candle, or red candles that gap higher and close above the close price of the preceding candle. This may cause some unexpected behaviour on some markets and timeframes. I can only recommend using 24-hour markets, if and where possible, as there are far fewer gaps and, generally, more data to work with.
█ NOTES
I know a few people have been requesting a single indicator that contains all my patterns and I definitely hear you on that one. However, I have been very busy working on other projects while trying to trade and be a human at the same time. For now I am going to maintain my original approach of releasing each pattern individually so as to maintain consistency. But I am now also working on getting my some of my libraries ready for public release and in doing so I will finally be able to fit all patterns into one script. I will also be giving my scripts some TLC by making them cleaner once I have the libraries up and running. Please bear with me in the meantime, this may take a while. Cheers!
Bearish Cassiopeia A Harmonic Patterns [theEccentricTrader]█ OVERVIEW
This indicator automatically detects and draws bearish Cassiopeia A harmonic patterns and price projections derived from the ranges that constitute the patterns.
Cassiopeia A, B and C harmonic patterns are patterns that I created/discovered myself. They are all inspired by the Cassiopeia constellation and each one is based on different rotations of the constellation as it moves through the sky. The range ratios are also based on the constellation's right ascension and declination listed on Wikipedia:
Right ascension 22h 57m 04.5897s–03h 41m 14.0997s
Declination 77.6923447°–48.6632690°
en.wikipedia.org
I actually developed this idea quite a while ago now but have not felt audacious enough to introduce a new harmonic pattern, let alone 3 at the same time! But I have since been able to run backtests on tick data going back to 2002 across a variety of market and timeframe combinations and have learned that the Cassiopeia patterns can certainly hold their own against the currently known harmonic patterns.
I would also point out that the Cassiopeia constellation does actually look like a harmonic pattern and the Cassiopeia A star is literally the 'strongest source of radio emission in the sky beyond the solar system', so its arguably more of a real harmonic phenomenon than the current patterns.
www.britannica.com
chandra.si.edu
█ CONCEPTS
Green and Red Candles
• A green candle is one that closes with a close price equal to or above the price it opened.
• A red candle is one that closes with a close price that is lower than the price it opened.
Swing Highs and Swing Lows
• A swing high is a green candle or series of consecutive green candles followed by a single red candle to complete the swing and form the peak.
• A swing low is a red candle or series of consecutive red candles followed by a single green candle to complete the swing and form the trough.
Peak and Trough Prices (Basic)
• The peak price of a complete swing high is the high price of either the red candle that completes the swing high or the high price of the preceding green candle, depending on which is higher.
• The trough price of a complete swing low is the low price of either the green candle that completes the swing low or the low price of the preceding red candle, depending on which is lower.
Historic Peaks and Troughs
The current, or most recent, peak and trough occurrences are referred to as occurrence zero. Previous peak and trough occurrences are referred to as historic and ordered numerically from right to left, with the most recent historic peak and trough occurrences being occurrence one.
Range
The range is simply the difference between the current peak and current trough prices, generally expressed in terms of points or pips.
Upper Trends
• A return line uptrend is formed when the current peak price is higher than the preceding peak price.
• A downtrend is formed when the current peak price is lower than the preceding peak price.
• A double-top is formed when the current peak price is equal to the preceding peak price.
Lower Trends
• An uptrend is formed when the current trough price is higher than the preceding trough price.
• A return line downtrend is formed when the current trough price is lower than the preceding trough price.
• A double-bottom is formed when the current trough price is equal to the preceding trough price.
Muti-Part Upper and Lower Trends
• A multi-part return line uptrend begins with the formation of a new return line uptrend and continues until a new downtrend ends the trend.
• A multi-part downtrend begins with the formation of a new downtrend and continues until a new return line uptrend ends the trend.
• A multi-part uptrend begins with the formation of a new uptrend and continues until a new return line downtrend ends the trend.
• A multi-part return line downtrend begins with the formation of a new return line downtrend and continues until a new uptrend ends the trend.
Double Trends
• A double uptrend is formed when the current trough price is higher than the preceding trough price and the current peak price is higher than the preceding peak price.
• A double downtrend is formed when the current peak price is lower than the preceding peak price and the current trough price is lower than the preceding trough price.
Muti-Part Double Trends
• A multi-part double uptrend begins with the formation of a new uptrend that proceeds a new return line uptrend, and continues until a new downtrend or return line downtrend ends the trend.
• A multi-part double downtrend begins with the formation of a new downtrend that proceeds a new return line downtrend, and continues until a new uptrend or return line uptrend ends the trend.
Wave Cycles
A wave cycle is here defined as a complete two-part move between a swing high and a swing low, or a swing low and a swing high. The first swing high or swing low will set the course for the sequence of wave cycles that follow; for example a chart that begins with a swing low will form its first complete wave cycle upon the formation of the first complete swing high and vice versa.
Figure 1.
Retracement and Extension Ratios
Retracement and extension ratios are calculated by dividing the current range by the preceding range and multiplying the answer by 100. Retracement ratios are those that are equal to or below 100% of the preceding range and extension ratios are those that are above 100% of the preceding range.
Fibonacci Retracement and Extension Ratios
The Fibonacci sequence is a series of numbers in which each number is the sum of the two preceding numbers, starting with 0 and 1. For example 0 + 1 = 1, 1 + 1 = 2, 1 + 2 = 3, and so on. Ultimately, we could go on forever but the first few numbers in the sequence are as follows: 0 , 1, 1, 2, 3, 5, 8, 13, 21, 34, 55, 89, 144.
The extension ratios are calculated by dividing each number in the sequence by the number preceding it. For example 0/1 = 0, 1/1 = 1, 2/1 = 2, 3/2 = 1.5, 5/3 = 1.6666..., 8/5 = 1.6, 13/8 = 1.625, 21/13 = 1.6153..., 34/21 = 1.6190..., 55/34 = 1.6176..., 89/55 = 1.6181..., 144/89 = 1.6179..., and so on. The retracement ratios are calculated by inverting this process and dividing each number in the sequence by the number proceeding it. For example 0/1 = 0, 1/1 = 1, 1/2 = 0.5, 2/3 = 0.666..., 3/5 = 0.6, 5/8 = 0.625, 8/13 = 0.6153..., 13/21 = 0.6190..., 21/34 = 0.6176..., 34/55 = 0.6181..., 55/89 = 0.6179..., 89/144 = 0.6180..., and so on.
1.618 is considered to be the 'golden ratio', found in many natural phenomena such as the growth of seashells and the branching of trees. Some now speculate the universe oscillates at a frequency of 0,618 Hz, which could help to explain such phenomena, but this theory has yet to be proven.
Traders and analysts use Fibonacci retracement and extension indicators, consisting of horizontal lines representing different Fibonacci ratios, for identifying potential levels of support and resistance. Fibonacci ranges are typically drawn from left to right, with retracement levels representing ratios inside of the current range and extension levels representing ratios extended outside of the current range. If the current wave cycle ends on a swing low, the Fibonacci range is drawn from peak to trough. If the current wave cycle ends on a swing high the Fibonacci range is drawn from trough to peak.
Harmonic Patterns
The concept of harmonic patterns in trading was first introduced by H.M. Gartley in his book "Profits in the Stock Market", published in 1935. Gartley observed that markets have a tendency to move in repetitive patterns, and he identified several specific patterns that he believed could be used to predict future price movements.
Since then, many other traders and analysts have built upon Gartley's work and developed their own variations of harmonic patterns. One such contributor is Larry Pesavento, who developed his own methods for measuring harmonic patterns using Fibonacci ratios. Pesavento has written several books on the subject of harmonic patterns and Fibonacci ratios in trading. Another notable contributor to harmonic patterns is Scott Carney, who developed his own approach to harmonic trading in the late 1990s and also popularised the use of Fibonacci ratios to measure harmonic patterns. Carney expanded on Gartley's work and also introduced several new harmonic patterns, such as the Shark pattern and the 5-0 pattern.
The bullish and bearish Gartley patterns are the oldest recognized harmonic patterns in trading and all the other harmonic patterns are ultimately modifications of the original Gartley patterns. Gartley patterns are fundamentally composed of 5 points, or 4 waves.
Bullish and Bearish Cassiopeia A Harmonic Patterns
• Bullish Cassiopeia A patterns are fundamentally composed of three troughs and two peaks. The second peak being higher than the first peak. And the third trough being higher than both the first and second troughs, while the second trough is also higher than the first.
• Bearish Cassiopeia A patterns are fundamentally composed of three peaks and two troughs. The second trough being lower than the first trough. And the third peak being lower than both the first and second peaks, while the second peak is also lower than the first.
The ratio measurements I use to detect the patterns are as follows:
• Wave 1 of the pattern, generally referred to as XA, has no specific ratio requirements.
• Wave 2 of the pattern, generally referred to as AB, should retrace by at least 11.34%, but no further than 22.31% of the range set by wave 1.
• Wave 3 of the pattern, generally referred to as BC, should extend by at least 225.7%, but no further than 341% of the range set by wave 2.
• Wave 4 of the pattern, generally referred to as CD, should retrace by at least 77.69%, but no further than 88.66% of the range set by wave 3.
Measurement Tolerances
In general, tolerance in measurements refers to the allowable variation or deviation from a specific value or dimension. It is the range within which a particular measurement is considered to be acceptable or accurate. In this script I have applied this concept to the measurement of harmonic pattern ratios to increase to the frequency of pattern occurrences.
For example, the AB measurement of Gartley patterns is generally set at around 61.8%, but with such specificity in the measuring requirements the patterns are very rare. We can increase the frequency of pattern occurrences by setting a tolerance. A tolerance of 10% to both downside and upside, which is the default setting for all tolerances, means we would have a tolerable measurement range between 51.8-71.8%, thus increasing the frequency of occurrence.
█ FEATURES
Inputs
• AB Lower Tolerance
• AB Upper Tolerance
• BC Lower Tolerance
• BC Upper Tolerance
• CD Lower Tolerance
• CD Upper Tolerance
• Pattern Color
• Label Color
• Show Projections
• Extend Current Projection Lines
Alerts
Users can set alerts for when the patterns occur.
█ LIMITATIONS
All green and red candle calculations are based on differences between open and close prices, as such I have made no attempt to account for green candles that gap lower and close below the close price of the preceding candle, or red candles that gap higher and close above the close price of the preceding candle. This may cause some unexpected behaviour on some markets and timeframes. I can only recommend using 24-hour markets, if and where possible, as there are far fewer gaps and, generally, more data to work with.
█ NOTES
I know a few people have been requesting a single indicator that contains all my patterns and I definitely hear you on that one. However, I have been very busy working on other projects while trying to trade and be a human at the same time. For now I am going to maintain my original approach of releasing each pattern individually so as to maintain consistency. But I am now also working on getting my some of my libraries ready for public release and in doing so I will finally be able to fit all patterns into one script. I will also be giving my scripts some TLC by making them cleaner once I have the libraries up and running. Please bear with me in the meantime, this may take a while. Cheers!
Bullish Cassiopeia A Harmonic Patterns [theEccentricTrader]█ OVERVIEW
This indicator automatically detects and draws bullish Cassiopeia A harmonic patterns and price projections derived from the ranges that constitute the patterns.
Cassiopeia A, B and C harmonic patterns are patterns that I created/discovered myself. They are all inspired by the Cassiopeia constellation and each one is based on different rotations of the constellation as it moves through the sky. The range ratios are also based on the constellation's right ascension and declination listed on Wikipedia:
Right ascension 22h 57m 04.5897s–03h 41m 14.0997s
Declination 77.6923447°–48.6632690°
en.wikipedia.org
I actually developed this idea quite a while ago now but have not felt audacious enough to introduce a new harmonic pattern, let alone 3 at the same time! But I have since been able to run backtests on tick data going back to 2002 across a variety of market and timeframe combinations and have learned that the Cassiopeia patterns can certainly hold their own against the currently known harmonic patterns. As can be seen in the picture above the bullish Cassiopeia A caught the 2009 bear market bottom almost perfectly.
I would also point out that the Cassiopeia constellation does actually look like a harmonic pattern and the Cassiopeia A star is literally the 'strongest source of radio emission in the sky beyond the solar system', so its arguably more of a real harmonic phenomenon than the current patterns.
www.britannica.com
chandra.si.edu
█ CONCEPTS
Green and Red Candles
• A green candle is one that closes with a close price equal to or above the price it opened.
• A red candle is one that closes with a close price that is lower than the price it opened.
Swing Highs and Swing Lows
• A swing high is a green candle or series of consecutive green candles followed by a single red candle to complete the swing and form the peak.
• A swing low is a red candle or series of consecutive red candles followed by a single green candle to complete the swing and form the trough.
Peak and Trough Prices (Basic)
• The peak price of a complete swing high is the high price of either the red candle that completes the swing high or the high price of the preceding green candle, depending on which is higher.
• The trough price of a complete swing low is the low price of either the green candle that completes the swing low or the low price of the preceding red candle, depending on which is lower.
Historic Peaks and Troughs
The current, or most recent, peak and trough occurrences are referred to as occurrence zero. Previous peak and trough occurrences are referred to as historic and ordered numerically from right to left, with the most recent historic peak and trough occurrences being occurrence one.
Range
The range is simply the difference between the current peak and current trough prices, generally expressed in terms of points or pips.
Upper Trends
• A return line uptrend is formed when the current peak price is higher than the preceding peak price.
• A downtrend is formed when the current peak price is lower than the preceding peak price.
• A double-top is formed when the current peak price is equal to the preceding peak price.
Lower Trends
• An uptrend is formed when the current trough price is higher than the preceding trough price.
• A return line downtrend is formed when the current trough price is lower than the preceding trough price.
• A double-bottom is formed when the current trough price is equal to the preceding trough price.
Muti-Part Upper and Lower Trends
• A multi-part return line uptrend begins with the formation of a new return line uptrend and continues until a new downtrend ends the trend.
• A multi-part downtrend begins with the formation of a new downtrend and continues until a new return line uptrend ends the trend.
• A multi-part uptrend begins with the formation of a new uptrend and continues until a new return line downtrend ends the trend.
• A multi-part return line downtrend begins with the formation of a new return line downtrend and continues until a new uptrend ends the trend.
Double Trends
• A double uptrend is formed when the current trough price is higher than the preceding trough price and the current peak price is higher than the preceding peak price.
• A double downtrend is formed when the current peak price is lower than the preceding peak price and the current trough price is lower than the preceding trough price.
Muti-Part Double Trends
• A multi-part double uptrend begins with the formation of a new uptrend that proceeds a new return line uptrend, and continues until a new downtrend or return line downtrend ends the trend.
• A multi-part double downtrend begins with the formation of a new downtrend that proceeds a new return line downtrend, and continues until a new uptrend or return line uptrend ends the trend.
Wave Cycles
A wave cycle is here defined as a complete two-part move between a swing high and a swing low, or a swing low and a swing high. The first swing high or swing low will set the course for the sequence of wave cycles that follow; for example a chart that begins with a swing low will form its first complete wave cycle upon the formation of the first complete swing high and vice versa.
Figure 1.
Retracement and Extension Ratios
Retracement and extension ratios are calculated by dividing the current range by the preceding range and multiplying the answer by 100. Retracement ratios are those that are equal to or below 100% of the preceding range and extension ratios are those that are above 100% of the preceding range.
Fibonacci Retracement and Extension Ratios
The Fibonacci sequence is a series of numbers in which each number is the sum of the two preceding numbers, starting with 0 and 1. For example 0 + 1 = 1, 1 + 1 = 2, 1 + 2 = 3, and so on. Ultimately, we could go on forever but the first few numbers in the sequence are as follows: 0 , 1, 1, 2, 3, 5, 8, 13, 21, 34, 55, 89, 144.
The extension ratios are calculated by dividing each number in the sequence by the number preceding it. For example 0/1 = 0, 1/1 = 1, 2/1 = 2, 3/2 = 1.5, 5/3 = 1.6666..., 8/5 = 1.6, 13/8 = 1.625, 21/13 = 1.6153..., 34/21 = 1.6190..., 55/34 = 1.6176..., 89/55 = 1.6181..., 144/89 = 1.6179..., and so on. The retracement ratios are calculated by inverting this process and dividing each number in the sequence by the number proceeding it. For example 0/1 = 0, 1/1 = 1, 1/2 = 0.5, 2/3 = 0.666..., 3/5 = 0.6, 5/8 = 0.625, 8/13 = 0.6153..., 13/21 = 0.6190..., 21/34 = 0.6176..., 34/55 = 0.6181..., 55/89 = 0.6179..., 89/144 = 0.6180..., and so on.
1.618 is considered to be the 'golden ratio', found in many natural phenomena such as the growth of seashells and the branching of trees. Some now speculate the universe oscillates at a frequency of 0,618 Hz, which could help to explain such phenomena, but this theory has yet to be proven.
Traders and analysts use Fibonacci retracement and extension indicators, consisting of horizontal lines representing different Fibonacci ratios, for identifying potential levels of support and resistance. Fibonacci ranges are typically drawn from left to right, with retracement levels representing ratios inside of the current range and extension levels representing ratios extended outside of the current range. If the current wave cycle ends on a swing low, the Fibonacci range is drawn from peak to trough. If the current wave cycle ends on a swing high the Fibonacci range is drawn from trough to peak.
Harmonic Patterns
The concept of harmonic patterns in trading was first introduced by H.M. Gartley in his book "Profits in the Stock Market", published in 1935. Gartley observed that markets have a tendency to move in repetitive patterns, and he identified several specific patterns that he believed could be used to predict future price movements.
Since then, many other traders and analysts have built upon Gartley's work and developed their own variations of harmonic patterns. One such contributor is Larry Pesavento, who developed his own methods for measuring harmonic patterns using Fibonacci ratios. Pesavento has written several books on the subject of harmonic patterns and Fibonacci ratios in trading. Another notable contributor to harmonic patterns is Scott Carney, who developed his own approach to harmonic trading in the late 1990s and also popularised the use of Fibonacci ratios to measure harmonic patterns. Carney expanded on Gartley's work and also introduced several new harmonic patterns, such as the Shark pattern and the 5-0 pattern.
The bullish and bearish Gartley patterns are the oldest recognized harmonic patterns in trading and all the other harmonic patterns are ultimately modifications of the original Gartley patterns. Gartley patterns are fundamentally composed of 5 points, or 4 waves.
Bullish and Bearish Cassiopeia A Harmonic Patterns
• Bullish Cassiopeia A patterns are fundamentally composed of three troughs and two peaks. The second peak being higher than the first peak. And the third trough being higher than both the first and second troughs, while the second trough is also higher than the first.
• Bearish Cassiopeia A patterns are fundamentally composed of three peaks and two troughs. The second trough being lower than the first trough. And the third peak being lower than both the first and second peaks, while the second peak is also lower than the first.
The ratio measurements I use to detect the patterns are as follows:
• Wave 1 of the pattern, generally referred to as XA, has no specific ratio requirements.
• Wave 2 of the pattern, generally referred to as AB, should retrace by at least 11.34%, but no further than 22.31% of the range set by wave 1.
• Wave 3 of the pattern, generally referred to as BC, should extend by at least 225.7%, but no further than 341% of the range set by wave 2.
• Wave 4 of the pattern, generally referred to as CD, should retrace by at least 77.69%, but no further than 88.66% of the range set by wave 3.
Measurement Tolerances
In general, tolerance in measurements refers to the allowable variation or deviation from a specific value or dimension. It is the range within which a particular measurement is considered to be acceptable or accurate. In this script I have applied this concept to the measurement of harmonic pattern ratios to increase to the frequency of pattern occurrences.
For example, the AB measurement of Gartley patterns is generally set at around 61.8%, but with such specificity in the measuring requirements the patterns are very rare. We can increase the frequency of pattern occurrences by setting a tolerance. A tolerance of 10% to both downside and upside, which is the default setting for all tolerances, means we would have a tolerable measurement range between 51.8-71.8%, thus increasing the frequency of occurrence.
█ FEATURES
Inputs
• AB Lower Tolerance
• AB Upper Tolerance
• BC Lower Tolerance
• BC Upper Tolerance
• CD Lower Tolerance
• CD Upper Tolerance
• Pattern Color
• Label Color
• Show Projections
• Extend Current Projection Lines
Alerts
Users can set alerts for when the patterns occur.
█ LIMITATIONS
All green and red candle calculations are based on differences between open and close prices, as such I have made no attempt to account for green candles that gap lower and close below the close price of the preceding candle, or red candles that gap higher and close above the close price of the preceding candle. This may cause some unexpected behaviour on some markets and timeframes. I can only recommend using 24-hour markets, if and where possible, as there are far fewer gaps and, generally, more data to work with.
█ NOTES
I know a few people have been requesting a single indicator that contains all my patterns and I definitely hear you on that one. However, I have been very busy working on other projects while trying to trade and be a human at the same time. For now I am going to maintain my original approach of releasing each pattern individually so as to maintain consistency. But I am now also working on getting my some of my libraries ready for public release and in doing so I will finally be able to fit all patterns into one script. I will also be giving my scripts some TLC by making them cleaner once I have the libraries up and running. Please bear with me in the meantime, this may take a while. Cheers!
Price Action Fractal Forecasts [AlgoAlpha]🔮 Price Action Fractal Forecasts - Unleash the Power of Historical Patterns! 🌌✨
Dive into the future with AlgoAlpha's Price Action Fractal Forecasts ! This innovative indicator utilizes the mesmerizing complexity of fractals to predict future price movements, offering traders a unique edge in the market. By analyzing historical price action and identifying repeating patterns, this tool forecasts future price trends, providing visually engaging and actionable insights.
Key Features:
🔄 Flexible Data Series Selection: Choose your preferred data series for precise analysis.
🕰 Flexible Training and Reference Data Windows: Customize the length of training data and reference periods to match your trading style.
📈 Custom Forecast Length: Adjust the forecast horizon to suit your strategic objectives.
🌈 Customizable Visual Elements: Tailor the colors of forecast deviation cones, data reference areas, and more for optimal chart readability.
🔄 Anticipatory and Repetitive Forecast Modes: Select between anticipating future trends or identifying repetitive patterns for forecasts.
🔎 Enhanced Similarity Search: Leverages correlation metrics to find the most similar historical data segments.
📊 Forecast Deviation Cone: Visualize potential price range deviations with adjustable multipliers.
🚀 Quick Guide to Maximizing Your Trading with Price Action Fractal Forecasts:
🛠 Add the Indicator: Search for "Price Action Fractal Forecasts" in TradingView's Indicators & Strategies. Customize settings according to your trading strategy.
📊 Strategic Forecasting: Monitor the forecast deviation cone and forecast directional changes for insights into potential future price movements.
🔔 Alerts for Swift Action: Set up notifications based on forecast changes to stay ahead of market movements without constant monitoring.
Behind the Magic: How It Works
The core of the Price Action Fractal Forecasts lies in its ability to compare current market behavior with historical data to unearth similar patterns. It first establishes a training data window to analyze historical prices. Within this window, it then defines a reference length to identify the most recent price action that will serve as the basis for comparison. The indicator searches through the historical data within the training window to find segments that closely match the recent price action in the reference period.
Depending on whether you choose the anticipatory or repetitive forecast mode, the indicator either looks ahead to predict future prices based on past outcomes following similar patterns or focuses on the repeating patterns within the reference period itself for forecasts. The forecast's direction can be configured to reflect the mean average of forecasted prices or the end-point relative to the start-point of the forecast, offering flexibility in how forecasts are interpreted.
To enhance the comprehensiveness and visualization, the indicator features a forecast deviation cone. This cone represents the potential range of price movements, providing a visual cue for volatility and uncertainty in the forecasted prices. The intensity of this cone can be adjusted to suit individual preferences, offering a visual guide to the level of risk and uncertainty associated with the forecasted price path.
Embrace the fractal magic of markets with AlgoAlpha's Price Action Fractal Forecasts and transform your trading today! 🌟🚀
Flags and Pennants [Trendoscope®]🎲 An extension to Chart Patterns based on Trend Line Pairs - Flags and Pennants
After exploring Algorithmic Identification and Classification of Chart Patterns and developing Auto Chart Patterns Indicator , we now delve into extensions of these patterns, focusing on Flag and Pennant Chart Patterns. These patterns evolve from basic trend line pair-based structures, often influenced by preceding market impulses.
🎲 Identification rules for the Extension Patterns
🎯 Identify the existence of Base Chart Patterns
Before identifying the flag and pennant patterns, we first need to identify the existence of following base trend line pair based converging or parallel patterns.
Ascending Channel
Descending Channel
Rising Wedge (Contracting)
Falling Wedge (Contracting)
Converging Triangle
Descending Triangle (Contracting)
Ascending Triangle (Contracting)
🎯 Identifying Extension Patterns.
The key to pinpointing these patterns lies in spotting a strong impulsive wave – akin to a flagpole – preceding a base pattern. This setup suggests potential for an extension pattern:
A Bullish Flag emerges from a positive impulse followed by a descending channel or a falling wedge
A Bearish Flag appears after a negative impulse leading to an ascending channel or a rising wedge.
A Bullish Pennant is indicated by a positive thrust preceding a converging triangle or ascending triangle.
A Bearish Pennant follows a negative impulse and a converging or descending triangle.
🎲 Pattern Classifications and Characteristics
🎯 Bullish Flag Pattern
Characteristics of Bullish Flag Pattern are as follows
Starts with a positive impulse wave
Immediately followed by either a short descending channel or a falling wedge
Here is an example of Bullish Flag Pattern
🎯 Bearish Flag Pattern
Characteristics of Bearish Flag Pattern are as follows
Starts with a negative impulse wave
Immediately followed by either a short ascending channel or a rising wedge
Here is an example of Bearish Flag Pattern
🎯 Bullish Pennant Pattern
Characteristics of Bullish Pennant Pattern are as follows
Starts with a positive impulse wave
Immediately followed by either a converging triangle or ascending triangle pattern.
Here is an example of Bullish Pennant Pattern
🎯 Bearish Pennant Pattern
Characteristics of Bearish Pennant Pattern are as follows
Starts with a negative impulse wave
Immediately followed by either a converging triangle or a descending converging triangle pattern.
Here is an example of Bearish Pennant Pattern
🎲 Trading Extension Patterns
In a strong market trend, it's common to see temporary periods of consolidation, forming patterns that either converge or range, often counter to the ongoing trend direction. Such pauses may lay the groundwork for the continuation of the trend post-breakout. The assumption that the trend will resume shapes the underlying bias of Flag and Pennant patterns
It's important, however, not to base decisions solely on past trends. Conducting personal back testing is crucial to ascertain the most effective entry and exit strategies for these patterns. Remember, the behavior of these patterns can vary significantly with the volatility of the asset and the specific timeframe being analyzed.
Approach the interpretation of these patterns with prudence, considering that market dynamics are subject to a wide array of influencing factors that might deviate from expected outcomes. For investors and traders, it's essential to engage in thorough back testing, establishing entry points, stop-loss orders, and target goals that align with your individual trading style and risk appetite. This step is key to assessing the viability of these patterns in line with your personal trading strategies and goals.
It's fairly common to witness a breakout followed by a swift price reversal after these patterns have formed. Additionally, there's room for innovation in trading by going against the bias if the breakout occurs in the opposite direction, specially when the trend before the formation of the pattern is in against the pattern bias.
🎲 Cheat Sheet
🎲 Indicator Settings
Custom Source : Enables users to set custom OHLC - this means, the indicator can also be applied on oscillators and other indicators having OHLC values.
Zigzag Settings : Allows users to enable different zigzag base and set length and depth for each zigzag.
Scanning Settings : Pattern scanning settings set some parameters that define the pattern recognition process.
Display Settings : Determine the display of indicators including colors, lines, labels etc.
Backtest Settings : Allows users to set a predetermined back test bars so that the indicator will not time out while trying to run for all available bars.
Auto Chart Patterns [Trendoscope®]🎲 Introducing our most comprehensive automatic chart pattern recognition indicator.
Last week, we published an idea on how to algorithmically identify and classify chart patterns.
This indicator is nothing but the initial implementation of the idea. Whatever we explained in that publication that users can do manually to identify and classify the pattern, this indicator will do it for them.
🎲 Process of identifying the patterns.
The bulk of the logic is implemented as part of the library - chartpatterns . The indicator is a shell that captures the user inputs and makes use of the library to deliver the outcome.
🎯 Here is the list of steps executed to identify the patterns on the chart.
Derive multi level recursive zigzag for multiple base zigzag length and depth combinations.
For each zigzag and level, check the last 5 pivots or 6 pivots (based on the input setting) for possibility of valid trend line pairs.
If there is a valid trend line pair, then there is pattern.
🎯 Rules for identifying the valid trend line pairs
There should be at least two trend lines that does not intersect between the starting and ending pivots.
The upper trend line should touch all the pivot highs of the last 5 or 6 pivots considered for scanning the patterns
The lower trend line should touch all the pivot lows of the last 5 or 6 pivots considered for scanning the patterns.
None of the candles from starting pivot to ending pivot should fall outside the trend lines (above upper trend line and below lower trend line)
The existence of a valid trend line pair signifies the existence of pattern. What type of pattern it is, to identify that we need to go through the classification rules.
🎲 Process of classification of the patterns.
We need to gather the following information before we classify the pattern.
Direction of upper trend line - rising, falling or flat
Direction of lower trend line - rising, falling or flat
Characteristics of trend line pair - converging, expanding, parallel
🎯 Broader Classifications
Broader classification would include the following types.
🚩 Classification Based on Geometrical Shapes
This includes
Wedges - both trend lines are moving in the same direction. But, the trend lines are either converging or diverging and not parallel to each other.
Triangles - trend lines are moving in different directions. Naturally, they are either converging or diverging.
Channels - Both trend lines are moving in the same direction, and they are parallel to each other within the limits of error.
🚩 Classification Based on Pattern Direction
This includes
Ascending/Rising Patterns - No trend line is moving in the downward direction and at least one trend line is moving upwards
Descending/Falling Patterns - No trend line is moving in the upward direction, and at least one trend line is moving downwards.
Flat - Both Trend Lines are Flat
Bi-Directional - Both trend lines are moving in opposite direction and none of them is flat.
🚩 Classification Based on Formation Dynamics
This includes
Converging Patterns - Trend Lines are converging towards each other
Diverging Patterns - Trend Lines are diverging from each other
Parallel Patterns - Trend Lines are parallel to each others
🎯 Individual Pattern Types
Now we have broader classifications. Let's go through in detail to find out fine-grained classification of each individual patterns.
🚩 Ascending/Uptrend Channel
This pattern belongs to the broader classifications - Ascending Patterns, Parallel Patterns and Channels. The rules for the Ascending/Uptrend Channel pattern are as below
Both trend lines are rising
Trend lines are parallel to each other
🚩 Descending/Downtrend Channel
This pattern belongs to the broader classifications - Descending Patterns, Parallel Patterns and Channels. The rules for the Descending/Downtrend Channel pattern are as below
Both trend lines are falling
Trend lines are parallel to each other
🚩 Ranging Channel
This pattern belongs to the broader classifications - Flat Patterns, Parallel Patterns and Channels. The rules for the Ranging Channel pattern are as below
Both trend lines are flat
Trend lines are parallel to each other
🚩 Rising Wedge - Expanding
This pattern belongs to the broader classifications - Rising Patterns, Diverging Patterns and Wedges. The rules for the Expanding Rising Wedge pattern are as below
Both trend lines are rising
Trend Lines are diverging.
🚩 Rising Wedge - Contracting
This pattern belongs to the broader classifications - Rising Patterns, Converging Patterns and Wedges. The rules for the Contracting Rising Wedge pattern are as below
Both trend lines are rising
Trend Lines are converging.
🚩 Falling Wedge - Expanding
This pattern belongs to the broader classifications - Falling Patterns, Diverging Patterns and Wedges. The rules for the Expanding Falling Wedge pattern are as below
Both trend lines are falling
Trend Lines are diverging.
🚩 Falling Wedge - Contracting
This pattern belongs to the broader classifications - Falling Patterns, Converging Patterns and Wedges. The rules for the Converging Falling Wedge are as below
Both trend lines are falling
Trend Lines are converging.
🚩 Rising/Ascending Triangle - Expanding
This pattern belongs to the broader classifications - Rising Patterns, Diverging Patterns and Triangles. The rules for the Expanding Ascending Triangle pattern are as below
The upper trend line is rising
The lower trend line is flat
Naturally, the trend lines are diverging from each other
🚩 Rising/Ascending Triangle - Contracting
This pattern belongs to the broader classifications - Rising Patterns, Converging Patterns and Triangles. The rules for the Contracting Ascending Triangle pattern are as below
The upper trend line is flat
The lower trend line is rising
Naturally, the trend lines are converging.
🚩 Falling/Descending Triangle - Expanding
This pattern belongs to the broader classifications - Falling Patterns, Diverging Patterns and Triangles. The rules for the Expanding Descending Triangle pattern are as below
The upper trend line is flat
The lower trend line is falling
Naturally, the trend lines are diverging from each other
🚩 Falling/Descending Triangle - Contracting
This pattern belongs to the broader classifications - Falling Patterns, Converging Patterns and Triangles. The rules for the Contracting Descending Triangle pattern are as below
The upper trend line is falling
The lower trend line is flat
Naturally, the trend lines are converging.
🚩 Converging Triangle
This pattern belongs to the broader classifications - Bi-Directional Patterns, Converging Patterns and Triangles. The rules for the Converging Triangle pattern are as below
The upper trend line is falling
The lower trend line is rising
Naturally, the trend lines are converging.
🚩 Diverging Triangle
This pattern belongs to the broader classifications - Bi-Directional Patterns, Diverging Patterns and Triangles. The rules for the Diverging Triangle pattern are as below
The upper trend line is rising
The lower trend line is falling
Naturally, the trend lines are diverging from each other.
🎲 Indicator Settings - Auto Chart Patterns
🎯 Zigzag Settings
Zigzag settings allow users to select the number of zigzag combinations to be used for pattern scanning, and also allows users to set zigzag length and depth combinations.
🎯 Scanning Settings
Number of Pivots - This can be either 5 or 6. Represents the number of pivots used for identification of patterns.
Error Threshold - Error threshold used for initial trend line validation.
Flat Threshold - Flat angle threshold is used to identify the slope and direction of trend lines.
Last Pivot Direction - Filters patterns based on the last pivot direction. The values can be up, down, both, or custom. When custom is selected, then the individual pattern specific last pivot direction setting is used instead of the generic one.
Verify Bar Ratio - Provides option to ignore extreme patterns where the ratios of zigzag lines are not proportionate to each other.
Avoid Overlap - When selected, the patterns that overlap with existing patterns will be ignored while scanning. Meaning, if the new pattern starting point falls between the start and end of an existing pattern, it will be ignored.
🎯 Group Classification Filters
Allows users to enable disable patterns based on group classifications.
🚩 Geometric Shapes Based Classifications
Wedges - Rising Wedge Expanding, Falling Wedge Expanding, Rising Wedge Contracting, Falling Wedge Contracting.
Channels - Ascending Channel, Descending Channel, Ranging Channel
Triangles - Converging Triangle, Diverging Triangle, Ascending Triangle Expanding, Descending Triangle Expanding, Ascending Triangle Contrcting and Descending Triangle Contracting
🚩 Direction Based Classifications
Rising - Rising Wedge Contracting, Rising Wedge Expanding, Ascending Triangle Contracting, Ascending Triangle Expanding and Ascending Channel
Falling - Falling Wedge Contracting, Falling Wedge Expanding, Descending Triangle Contracting, Descending Triangle Expanding and Descending Channel
Flat/Bi-directional - Ranging Channel, Converging Triangle, Diverging Triangle
🚩 Formation Dynamics Based Classifications
Expanding - Rising Wedge Expanding, Falling Wedge Expanding, Ascending Triangle Expanding, Descending Triangle Expanding, Diverging Triangle
Contracting - Rising Wedge Contracting, Falling Wedge Contracting, Ascending Triangle Contracting, Descending Triangle Contracting, Converging Triangle
Parallel - Ascending Channel, Descending Channgel and Ranging Channel
🎯 Individual Pattern Filters
These settings allow users to enable/disable individual patterns and also set last pivot direction filter individually for each pattern. Individual Last Pivot direction filters are only considered if the main "Last Pivot Direction" filter is set to "custom"
🎯 Display Settings
These are the settings that determine the indicator display. The details are provided in the tooltips and are self explanatory.
🎯 Alerts
A basic alert message is enabled upon detection of new pattern on the chart.
