Candle Confirmation Pattern by Yashar Seyyedin MT4
- Indicators
- Yashar Seyyedin
- Version: 1.0
For MT5 version please click here.
Introduction
Most traders use candle patterns as a confirmation tool before entering a trade. As you know there are lots of candle patterns out there. However I realized most of them can be generalized in simple rules. So I developed my own candle pattern(Although I cannot say for sure this is mine).
pattern description
The pattern consists of three consecutive candles. This is true for most of the patterns out there (considering there is a confirmation necessary to most candle patterns).
Rules for long(buy):
1. Close[bar2]>High[bar1]
2. High[bar3]>High[bar2]
How does this work?
The pattern detects existence of momentum in a direction. A candle being closed above high of previous candle is a good sign that there is upside momentum. Add to that the high being broken in the third candle makes the momentum even more obvious. At the end of a downtrend this can be a sign not to be neglected.
NOTE
note1: This indicator generates too many signals as the rules are pretty simple and can cover dozens of already defined candle patterns out there. Therefor it is pretty much necessary to filter out unwanted signals with other tools as well as your naked eye. In other words this is just a confirmation signal for you to enter the trade setup that you already detected.
note2: This is a non repaint indicator. Even the signal appearing in the unconfirmed candle would not go away with bar closure. So you do not need to wait for candle closure and I would say you should not wait.
note3: You have buffers to be applied in EAs. Although the rules are too easy and can be easily merged into EA source code.
