Reversal Candlestick Pattern Detector

The Reversal Candlestick Pattern Detector indicator automatically identifies and highlights specific bullish and bearish candlestick formations that typically signal a potential change in market direction.

Usage

The tool is designed to filter for reversal patterns only when they occur within a relevant trend context (e.g., bullish patterns during a downtrend or at local lows). Users can select a specific pattern to monitor from the settings menu. When a pattern is detected, an arrow and label appear on the chart.

Example scenarios include:

• Hammer/Shooting Star: Used to identify potential exhaustion at the bottom of a move (Hammer) or the top of a rally (Shooting Star).
• Morning/Evening Star: Three-candle patterns used to spot major structural shifts.
• Engulfing: Identifying momentum shifts where the current candle body completely covers the previous one.
• Gap Detection: Spotting unfilled gaps or gaps crossing key moving averages (SMA8/SMA50) to identify breakaway momentum.

Details

The script employs internal logic to define "trend" based on the relationship between price action over a user-defined lookback period. For a bullish reversal to trigger, the script typically requires the current price to be at a local low or within a downward move defined by the "Trend in past n bars" setting. Conversely, bearish reversals require price to be at local highs or within an upward move. This filtering helps reduce false signals that might appear during sideways or non-trending markets.

The patterns supported include:

1. Hammer and Shooting Star
2. Bullish and Bearish Engulfing
3. Morning and Evening Star
4. Harami (Bullish/Bearish)
5. Piercing Line and Dark Cloud Cover
6. Hook Reversal
7. Bullish and Bearish Gaps

Settings

• Candlesticks Pattern: Selects which specific pattern the indicator will search for on the chart.
• Trend in past n bars: Sets the lookback period used to determine the prevailing trend and local highs/lows.

FAQ

How do I access the Reversal Candlestick Pattern Detector?

You can get access on the LuxAlgo Library for charting platforms like TradingView, MetaTrader (MT4/MT5), and NinjaTrader for free.

Can I see multiple patterns at once?

Currently, the tool allows you to select one pattern type at a time via the "Candlesticks Pattern" dropdown to keep the chart clean and focused.

Does the indicator include alerts?

Yes, the script includes optimized alerts for both bullish and bearish detections that trigger upon bar close.