Master Pattern

The Master Pattern indicator is a versatile tool inspired by Wyckoff's framework, designed to streamline trading decisions. It automatically identifies major and minor patterns, displaying associated expansion lines directly on your chart. Additionally, it highlights liquidity levels, which traders can leverage for setting targets and stops. It's important to note that these liquidity levels are plotted retrospectively since they are based on historical pivots.

How to Trade the Master Pattern Indicator?

The Master Pattern indicator excels in detecting contraction phases within markets, identified by a lower high and higher low. The average derived from the recent swing high/low is utilized as an expansion line. When the price breaks the contraction range upward, it signifies a bullish master pattern, whereas a downward break indicates a bearish master pattern.

During the expansion phase, prices often remain stationary around the expansion level before potentially entering a markup phase characterized by significant deviation from the expansion line.

Traders can also use expansion lines as vital support and resistance levels, adding to their strategic trading arsenal.

Major and Minor Patterns Explained

The indicator classifies detected patterns as either major or minor. Major patterns are noteworthy as they occur when the price breaks both the upper and lower boundaries of a contraction range. These are visually distinguished by a highlighted border around the contraction area. Conversely, minor patterns register when only one extremity is broken, providing traders with crucial insights for nuanced trading strategies.

Configuration Settings

Achieving optimal trading results with the Master Pattern indicator involves configuring several settings to match individual trading strategies:

• Contraction Detection Lookback: This setting determines the lookback period to identify swing points that form the contraction range.
• Liquidity Levels: Establishes the lookback period for detecting swing points used as liquidity levels. Adjusting this can shift focus between shorter-term and longer-term liquidity levels.
• Show Major Pattern: When enabled, the indicator displays major patterns.
• Show Minor Pattern: When enabled, the indicator displays minor patterns, allowing traders to identify potential trading opportunities.

FAQs About Master Pattern Indicator

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

What is the importance of liquidity levels in trading? Liquidity levels are crucial as they help identify potential areas for executing trades with desired risk management by serving as targets and stops.

Can expansion lines be used independently as a trading strategy? Yes, expansion lines can independently act as support or resistance levels, offering valuable signals within various trading strategies.