Libraries: MQL5 Wizard - Candlestick Patterns Class - page 3

[Sergey Golubev]

Three Outside Up (based on Candle Patterns for Forex Price Reversals article)

Talking Points

• Candlestick analysis can be used to spot market reversals and resumptions of trends.
• The bullish engulfing pattern can spotted inside the Three Outside Up pattern.
• Candles can be used as a confirmation tool, and used for Forex entries

Understanding candlestick charts and their patterns allow traders to work price action into an existing Forex trading strategy. Normally candle patterns such as the Bullish Three Outside Up can be used to confirm a change of trend, or even validate a market entry. With this idea in mind we will focus on recognizing and trading one of the markets most clear candle patterns.

The Three Outside Up

A Three Outside Up candle pattern may sound complicated at first, but it is actually a derivation of the bullish engulfing pattern. Pictured above we can see the Three Outside Up pattern is comprised of three individual candles. The first candle should close down and will depict the end of a currency pair’scurrentweakness. This first candle can close with a variety of body and wick sizes and can vary from chart to chart.While it is notdirectly related to the next engulfing pattern, this candle should denote the end of the markets current decline.

The second and third candles in the pattern are arguably the most important. As seen above, the second candle is expected to engulf the first with a large blue candle. This large bullish engulfing candle signifies new strength in the market as price attempts to break to higher highs. To be considered a complete bullish engulfing candle price of the second candle should close well above the high of the first candle. Lastly, candle number three is used to validate the current change in market direction. This candle should open immediately higher, creating as small a wick to the downside as possible. Upon closing above candle two, candle three will validate the new bullish market bias.

Uses in Trading

Above we can see the Bullish Three Outside Up in action on the GBPUSD currency pair. The daily graph has been in a long standing established uptrend, but notice there has been dips along the way. There have been three candle patterns, which have been highlighted in the chart, showing prices return back in the direction of the trend. The last of which signaled the August 2013 bottom for the pair, before rallying as much as 1158. So how can this be worked into a trading plan?

Traders looking to take advantage of the Bullish Three Outside Down pattern can add it into any existing trending market plan.

[Sergey Golubev]

Three Inside Down (based on dailyfx article)

Talking Points

• Traders can use Candlestick patterns to modify their strategy to price action clues.
• The Three Inside Down pattern can confrim new market breakouts
• This pattern can signal an opportunity to take profits or place new market entries

Understanding candlestick charts continues to be the backbone of price action analysis for the Forex market. Once traders understand the basics, they can then begin to compile a series of candles to form patterns to confirm potential changes and market direction. Often candle patterns are also used to confirm an existing idea. Today we will review the Three Inside Down pattern and how it can be used in your trading.

Three Inside Down Pattern

TheThree Inside Down candle pattern is actually a continuation of the Harami. Pictured above,we can see that this pattern is broken into three distinct candles. First again we have a large engulfing candle. This blue candle represents the end of bullish momentum as trading pauses with an inside bar creating the Harami. The third candle confirms the markets new downward bias with price breaking to lower lows. Not only should the body of candle number three closes below the second candle, It should close beneath the first candle as well.

This pattern is considered a strong candle for the fact that traders get an extra candle for market confirmation. As price moves toward lower lows traders can then look for new selling or retracement opportunities.

Uses in Trading

Above we can see an effect Three Inside Down pattern on the AUDUSD daily graph. After a strong bullish move, the AUDUSD consolidated with an inside candle. The third candle confirmed the markets direction, with a break of price support. After its creation, the market put in its current high then quickly descended 556 pips to for a higher low on the chart.

Traders looking to take advantage of the Bullish Three Inside Down pattern can add it into any existing trending market plan to identify changes in market direction. Traders may even trade independently it with an inside bar breakout strategy. Regardless of the method taken, traders should track their progress with a trading journal and periodically review how candle analysis is working in their trading.

[Rodolfo Andrade]

Hello, I would like to understand why this class uses MA indicator? I thought that Candlestick patterns just wore data price of candles.

[Automated-Trading]

Rodorush:
Hello, I would like to understand why this class uses MA indicator? I thought that Candlestick patterns just wore data price of candles.

The candlestick patterns, implemented in this class are based on patterns, descibed the book "Strategies of best traders" (in Russian), many patterns have condition on the averaged value of close price (CloseAvg), so MA is used for averaging.

[Francis Dogbe]

this is really good info

[Sergey Golubev]

Forum on trading, automated trading systems and testing trading strategies

Press review

newdigital, 2014.05.13 12:13

USD/JPY Clears 102.00 As Harami Suggests Further Gains

• USD/JPY Technical Strategy: Longs Preferred
• Push back above 120.00 opens 102.70
• Harami pattern supports further gains

USD/JPY’s push past 102.00 following the Harami formation on the daily puts the next noteworthy resistance level at 102.70 on the cards. The absence of a bearish signal on the daily and four hour charts gives little indication of a potential intraday reversal.

USD/JPY: Prices Push Past 102.00 Following Harami Pattern

An examination of intraday price action on the chart below highlights the hesitation from the bulls near 102.00. However following a push past the psychologically-significant level of resistance USD/JPY is eying the 102.70 mark.

USD/JPY: Hammer Foreshadowed Recovery

[hhr_rahimi]

Please note that conditions on line 486 and 487 are wrong

WORNG Hanging Man candlestick pattern :

      (MathMin(Open(1),Close(1)>(High(1)-(High(1)-Low(1))/3.0)) && // body in upper 1/3
      (Close(1)>Close(2)) && (Open(1)>Open(2))))                   // body gap

the correct version is:

      (MathMin(Open(1),Close(1))>(High(1)-(High(1)-Low(1))/3.0)) && // body in upper 1/3
      (Close(1)>Close(2)) && (Open(1)>Open(2)))                   // body gap

[Samuel Mata Aguayo]

I cant find what and how to set parameters before calling to ValidationSettings method. I got the error:  

CExpertBase::ValidationSettings: not the right time to check parameters

I found is for the next code in CExpertBase :

   if(m_init_phase!=INIT_PHASE_TUNING)

     {

      Print(__FUNCTION__+": not the right time to check parameters");

      return(false);

     }

How to pass that error ?

[[Deleted]]

Automated-Trading:

MQL5 Wizard - Candlestick Patterns Class:

Author: MetaQuotes Software Corp.

Hi

I could not figure out where or how the Symbol and Time Frames are defined in Candlestick Patterns Class !!!

I am looking for a situation, where I am running strategy on M5 while my ENTRY conditions are on M1. So I use above class, I assume it is defaulting to M5 and current symbol, whereas I need to check patters on M1.

Thanks and hopeful to get some idea about it.