# Candle 2 Closure Candle 2 Closure is an indicator on [Vela](https://vela.luxalgo.com/chart), our next-generation charting platform, written in Pine Script®. Candle 2 Closure marks the reversal (Candle 2) and expansion (Candle 3) steps of the four-candle failed-breakout sequence from the TTrades Fractal framework. Equilibrium zones, key levels, reversal filtering, and real-time alerts turn failed range breaks into structured setups across markets and timeframes. - Indicator in the LuxAlgo Library, by LuxAlgo, published Dec 24, 2025. - Access: free. - Concepts: [Two-bar Reversal](https://www.luxalgo.com/library/concept/two-bar-reversal/) (primary), [Candle Range Theory](https://www.luxalgo.com/library/concept/candle-range-theory/) - Open on Vela: https://vela.luxalgo.com/chart?pineScriptCodeId=cmpwn0p2v000vvhsg7prq738s - Page: https://www.luxalgo.com/library/indicator/candle-2-closure/ **Candle 2 Closure** codifies a failed-expansion reversal from the TTrades Fractal framework into a four-candle sequence any chart can run. Price trades outside the previous candle's range but cannot hold the break, closing back inside it: kin to the classic [two-bar reversal](https://www.luxalgo.com/library/concept/two-bar-reversal/), but demanding confirmation before a setup completes. Key levels, equilibrium zones, and real-time alerts wrap the pattern into a structured workflow for discretionary and systematic traders alike. ## How to Trade the Candle 2 Closure? - **Candle 1 (Context)**: price trades into a significant area: a key high, low, or range extreme built over many bars. - **Candle 2 (Reversal)**: trades outside Candle 1's range but closes back inside it; the failed breakout is the signal's core. - **Candle 3 (Expansion)**: closes outside Candle 2's range in the reversal's direction, confirming momentum behind the turn. - **Candle 4 (Continuation)**: follow-through that completes the pattern and reinforces the directional bias. In high-quality setups, subsequent highs or lows often form inside the equilibrium zones drawn from Candles 2 and 3, the areas where price found acceptance before expanding. Alerts fire as Candle 2 and Candle 3 conditions confirm, so the sequence can be traded without staring at the chart. ## Candle 2 Closure Settings - **Candle 2 (Reversal)**: toggle reversal detection. - **Candle 3 (Expansion)**: toggle expansion confirmation. - **Reversals Filter**: only accept reversals at the highest or lowest point of the last N bars. Longer lookbacks drop minor turns. - **Wick Threshold %**: when a wick exceeds this share of the bar's range, the equilibrium zone is computed from the wick alone. - **Style & Alerts**: bullish and bearish colors, transparency, key level and zone toggles, plus separate alert switches for Candle 2 and Candle 3. ## Frequently Asked Questions ### How does this differ from a swing failure pattern? Both begin with a probe beyond a level that fails. The [Swing Failure Pattern (SFP)](https://www.luxalgo.com/library/indicator/swing-failure-pattern-sfp/) build centers on the sweep and reclaim of swing points, while Candle 2 Closure requires a full close-based sequence (reversal, then expansion) before a setup is valid, trading immediacy for structure. ### Is it usable by beginners? Yes. The four-candle structure is visually intuitive, the zones show exactly where balance formed, and alerts remove the need for constant monitoring, while the reversal filter keeps it sharp for experienced structure traders. ### How do I get Candle 2 Closure? It is free on this LuxAlgo Library page. Add it to a chart in one step, or open it in Quant, our coding agent, directly from the page to study the pattern across markets. You can also copy the source code from this page and run it anywhere Pine Script® runs. ## Related indicators - [CBC Flip with Targets and Filters](https://www.luxalgo.com/library/indicator/cbc-flip-with-targets-and-filters/) (Two-bar Reversal): markdown at https://www.luxalgo.com/library/indicator/cbc-flip-with-targets-and-filters.md - [CRT Sweep & Setup Highlighter](https://www.luxalgo.com/library/indicator/crt-sweep-setup-highlighter/) (Candle Range Theory): markdown at https://www.luxalgo.com/library/indicator/crt-sweep-setup-highlighter.md - [Long Wick Detector](https://www.luxalgo.com/library/indicator/long-wick-detector/) (Pin Bar): markdown at https://www.luxalgo.com/library/indicator/long-wick-detector.md - [The Strat](https://www.luxalgo.com/library/indicator/the-strat/) (Inside Bar): markdown at https://www.luxalgo.com/library/indicator/the-strat.md - [N Bar Reversal Detector](https://www.luxalgo.com/library/indicator/n-bar-reversal-detector/) (Three-bar Reversal): markdown at https://www.luxalgo.com/library/indicator/n-bar-reversal-detector.md - [Wide-range Bar](https://www.luxalgo.com/library/indicator/wide-range-bar/) (Chart & Candlestick Patterns): markdown at https://www.luxalgo.com/library/indicator/wide-range-bar.md - [Engulfing Bar](https://www.luxalgo.com/library/indicator/engulfing-bar/) (Chart & Candlestick Patterns): markdown at https://www.luxalgo.com/library/indicator/engulfing-bar.md - [Exhaustion Bar](https://www.luxalgo.com/library/indicator/exhaustion-bar/) (Chart & Candlestick Patterns): markdown at https://www.luxalgo.com/library/indicator/exhaustion-bar.md --- Source: https://www.luxalgo.com/library/indicator/candle-2-closure/ (LuxAlgo Library). Free to use with attribution: https://www.luxalgo.com/library/license/