Pattern Recognition Signals

The Pattern Recognition Signals indicator identifies and validates high-probability, non-repainting Double Top/Bottom and Triple Top/Bottom patterns. It filters for structural quality, calculates adaptive take-profit and stop-loss zones based on the Average Daily Range (ADR), and provides a complete statistical breakdown via an on-chart dashboard to offer a quantifiable edge.

Usage

The Usage section describes how to interpret the patterns and trade setups identified by the script. Traders can use the automated pattern detection to find classic "W" and "M" structural reversals.

• Pattern Identification: The script automatically plots non-repainting Double and Triple patterns based on pivot highs and lows. Green labels indicate bullish setups, while red labels indicate bearish setups.
• Risk Management: Upon pattern confirmation, the tool projects TP1, TP2, and SL zones. These are dynamically adjusted based on the asset's current 10-day ADR, helping users adapt to changing volatility.
• Performance Tracking: Use the dashboard to monitor the historical win rate of TP1 and TP2 on the current timeframe and ticker. This helps in assessing whether the current market environment is conducive to pattern trading.
• Filtering: Users can adjust the quality filters (like Max Pattern Height) to ignore patterns that are too large or volatile to be considered reliable.

Details

The script utilizes a non-repainting pivot engine to ensure that once a signal is confirmed and plotted, it remains stable.

• Multi-Wave Detection: The algorithm scans for a specific sequence of pivot points (5 points for Double patterns, 7 points for Triple patterns) to confirm structural integrity.
• ADR Normalization: By using the Average Daily Range (ADR) as a basis for pattern height and target calculation, the script remains objective across different asset classes (e.g., Gold vs. Forex) without needing manual point-value adjustments.
• Uniformity Logic: The script includes a internal wave size ratio check to ensure that the individual legs of the pattern are proportional, preventing the detection of skewed or irregular structures.

Settings

Detection

• Pivot Length: Determines the sensitivity of the underlying pivot high/low detection.
• Min/Max Pattern Bars: Sets the required duration (in bars) for a pattern to be considered valid.
• Max Wave Size Ratio: Controls the proportionality between pattern legs to ensure structural uniformity.
• Max Pattern Height % of ADR10: Filters out patterns that are excessively tall relative to the asset's daily volatility.
• Min Bars Between Signals: Prevents over-signaling by enforcing a minimum distance between consecutive patterns.

Display & Targets

• Show Double/Triple Patterns: Toggles the visibility of specific pattern types.
• Zone Extension (bars): Defines how far into the future the TP and SL boxes are projected.
• TP1/TP2/SL % of ADR10: Adjusts the distance of target and stop-loss levels based on a percentage of the 10-day ADR.
• Zone Height % of ADR10: Sets the visual thickness of the target and stop-loss boxes.

Colors & Dashboard

• Bullish/Bearish Color: Sets the theme for labels and pattern lines.
• TP/SL Colors: Customizes the visual appearance of the risk management zones.
• Dashboard Text Size: Adjusts the scale of the performance dashboard on the chart.

FAQ

How do I interpret the win rates on the dashboard? The dashboard tracks how many confirmed signals hit their respective TP1 or TP2 targets versus the SL before a new signal was generated, providing a real-time statistical look at the pattern's success.

Does this indicator repaint? No, the script is built using a non-repainting pivot engine, meaning signals and zones are confirmed based on closed candles and do not shift after the fact.

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