Price Action Demo

The Price Action Demo indicator provides an automated way to detect classic price action formations, including Inside Bars, Pin Bars, and Fakey patterns, to help traders identify potential market reversals and continuations.

Usage

This tool can be used to scan the charts for specific candlestick patterns that often signal shifts in market sentiment:

• Inside Bars: Marked with an 'I' at the bottom of the chart, these signify a period of consolidation where the current candle's range is contained within the previous candle's range.
• Pin Bars: Marked with a 'P' above or below the candle. A bullish Pin Bar (green 'P') suggests rejection of lower prices, while a bearish Pin Bar (red 'P') suggests rejection of higher prices.
• Fakey Patterns: These represent a false breakout of an Inside Bar. When a Fakey Down occurs, the script plots a downward triangle and horizontal levels; a Fakey Up plots an upward triangle and horizontal levels. These often indicate a trap for breakout traders followed by a reversal.

Details

The script identifies patterns based on price geometry:

• Inside Bar Logic: Validated when the current high is lower than the previous high and the current low is higher than the previous low.
• Pin Bar Logic: Determined by the ratio of the candle body relative to its total range. If the body is compressed within a specific percentage of the candle (defined by the user), it is flagged as a Pin Bar.
• Fakey Logic: This is a more complex multi-bar setup. It requires an Inside Bar followed by a candle that breaks the mother bar's range but fails to close beyond it, often forming a Pin Bar in the process.

Settings

• Pin bar body over whole candle: This setting controls the threshold for Pin Bar detection. A value of 0.6 means the body must be within 60% of one end of the candle range, effectively defining how long the "wick" must be relative to the body.

FAQ

How do I use the Fakey signals?

Fakey signals are often used as reversal indicators. A Fakey Up suggests that a bearish breakout failed and prices may move higher, while a Fakey Down suggests a bullish breakout failed and prices may move lower.

Can I set alerts for these patterns?

Yes, the script includes alert conditions for Inside Bars, Pin Bars, and both types of Fakey patterns, allowing you to receive notifications when these setups occur.

How can I access Price Action Demo?

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