Reversal candlestick structure for MT4

Reversal candlestick structure for MT4

The Reversal Candlestick Structure indicator detects multiple candlestick patterns occurring when trends are most likely to experience a reversal in real-time. The reversal detection method includes various settings allowing users to adjust the reversal detection algorithm more precisely.

A dashboard showing the percentage of patterns detected as reversals is also included.

? USAGE

Figure 1

Candlestick patterns are ubiquitous to technical analysts, allowing them to detect trend continuations, reversals, and indecision.

The proposed tool effectively detects reversals by using the confluence between candlestick patterns and a reversal detection method based on the stochastic oscillator, acting as a filter for the patterns. If a candlestick pattern occurs while conditions suggest a potential reversal then the pattern is highlighted.

Figure 2

The displayed candle coloring allows users to observe the reversal detection method, with colored candles indicating potential reversals.

Figure 3

Users wanting to detect longer-term reversals can use a higher "Trend Length" setting, this can however lead to an increased amount of displayed candlestick patterns.

Figure 4

To prevent false positives users also have control over a "Threshold" setting in a range between (0, 100), with values closer to 100 preventing candlesticks from being detected at the start of trends.

The "Warmup Length" serves a similar purpose, and aims to prevent sudden moves to be classified as reversals. Higher values of this setting will require trends to be established for a longer period of time for reversal conditions to be detected.

?Dashboard

To evaluate the role of individual candlestick patterns as potential reversal signals relative to the proposed reversal detection method, a dashboard displaying the percentage of candlestick patterns displayed (that occur when a potential reversal is detected) over the total amount detected.

Hovering on the dashboard cells of the "Reversal %" column allows displaying the total amount of patterns detected.

• Hammer - A bullish reversal pattern that forms after a decline, characterized by a small body at the upper end of the trading range and a long lower shadow. 
  The Hammer pattern appears at the bottom of a downtrend. It is identified by a small upper wick (or no upper wick) with a small body, and an elongated lower wick whose length is 2X greater than the candle body’s width.
  
  
• Inverted Hammer - A bullish reversal pattern that forms after a downtrend, featuring a small body at the lower end of the trading range and a long upper shadow. 
  The Inverted Hammer pattern appears at the bottom of a downtrend. It is identified by a small lower wick (or no lower wick) with a small body, and an elongated upper wick whose length is 2X greater than the candle body’s width.
  
  
• Bullish Engulfing - A bullish reversal pattern where a small bearish candlestick is followed by a larger bullish candlestick that completely engulfs the previous candle. 
  The Bullish Engulfing pattern appears at the bottom of a downtrend. It is a 2 bar pattern, identified by a large bullish candle body fully encapsulating (opening lower and closing higher) the previous small (bearish) candle body.
  
  
• Rising 3 - A bullish continuation pattern that consists of a long bullish candlestick followed by three smaller bearish candlesticks and then another long bullish candlestick.
  
• 3 White Soldiers - A bullish reversal pattern consisting of three consecutive long bullish candlesticks, each opening within the previous candle's body and closing higher.
  
• Morning Star - A bullish reversal pattern made up of three candlesticks: a long bearish candlestick, followed by a short candlestick, and then a long bullish candlestick.
  
• Bullish Harami - A bullish reversal pattern where a small bullish candlestick is completely within a previous larger bearish candlestick.
  
• Tweezer Bottom - A bullish reversal pattern identified by an initial bullish candle, followed by a bearish candle, both having equal lows.
  

• Hanging Man - A bearish reversal pattern that forms after an uptrend, characterized by a small body at the upper end of the trading range and a long lower shadow. 
  The Hanging Man pattern appears at the top of an uptrend. It is identified by a small upper wick (or no upper wick) with a small body, and an elongated lower wick whose length is 2X greater than the candle body’s width.
  
  
• Shooting Star - A bearish reversal pattern that forms after an uptrend, featuring a small body at the lower end of the trading range and a long upper shadow. 
  The Shooting Star pattern appears at the top of an uptrend. It is identified by a small lower wick (or no lower wick) with a small body, and an elongated upper wick whose length is 2X greater than the candle body’s width.
  
  
• Bearish Engulfing - A bearish reversal pattern where a small bullish candlestick is followed by a larger bearish candlestick that completely engulfs the previous candle. 
  The Bearish Engulfing pattern appears at the top of a downtrend. It is a 2 bar pattern, identified by a large bearish candle body fully encapsulating (opening higher and closing lower) the previous small (bullish) candle body.
  
  
• Falling 3 - A bearish continuation pattern that consists of a long bearish candlestick followed by three smaller bullish candlesticks and then another long bearish candlestick.
  
• 3 Black Crows - A bearish reversal pattern consisting of three consecutive long bearish candlesticks, each opening within the previous candle's body and closing lower.
  
• Evening Star - A bearish reversal pattern made up of three candlesticks: a long bullish candlestick, followed by a short candlestick, and then a long bearish candlestick.
  
• Bearish Harami - A bearish reversal pattern where a small bearish candlestick is completely within a previous larger bullish candlestick.
  
• Tweezer Top - A bearish reversal pattern is identified by an initial bullish candle, followed by a bearish candle, both having equal highs."
  

• Group including toggles for each of the supported candlestick patterns. Enabled toggles will allow detection of the associated candlestick pattern.
  

• Trend Length: Determines the sensitivity of the reversal detection method to shorter-term variation, with higher values returning a detection method more sensitive to longer-term trends.
  
• Threshold: Determines how easy it is for the reversal detection method to consider a trend at an extreme point.
  
• Warmup Length: Warmup period in the reversal detection method, longer values will require a longer-term trend to detect potential reversals.
  

• Color Candles: Enable candle coloring on the user chart based on the reversal detection method.
  
• Use Gradient: Use a gradient as candle coloring.
  
• Label Size: Size of the labels displaying the detected candlesticks patterns.
  

• Show Dashboard: Display the dashboard on the user chart when enabled.
  
• Location: Dashboard location on the user chart.
  
• Size: Size of the displayed dashboard.