Candlestick Structure
Jul 2, 2024

The Candlestick Structure indicator is a powerful tool designed to help traders identify major market trends and leverage various candlestick patterns. By aligning detected patterns with the predominant trend, it effectively filters out less relevant signals, offering traders clearer insights for strategic decision-making. This indicator provides multiple methods for trend detection, allowing users to select their preferred approach.
In addition to pattern detection, a comprehensive dashboard indicates the alignment percentage of each pattern, enhancing traders' ability to analyze trend congruence.
How to Trade Using the Candlestick Structure Indicator
This tool distinguishes between major and minor trends, allowing traders to focus on patterns that align with significant market movements. By concentrating on candlestick formations that match a major trend, traders can identify potential retracement endpoints, offering valuable entry points in ongoing trends.
Traders can monitor each pattern's congruity through the alignment dashboard, clarifying which formations align consistently with overall trends and which do not.
Note: The alignment percentage solely indicates if the pattern's direction matches the current trend, providing basic readings, not a confidence assessment.
Candlestick Patterns Overview
This indicator tracks 16 distinct candlestick formations to enhance the trader's market interpretation capabilities.
Understanding Bullish Patterns
- Hammer: This pattern features a small upper wick and a robust lower wick, at least twice the length of the body.
- Inverted Hammer: Characterized by a small lower wick and an elongated upper wick.
- Bullish Engulfing: A dominant bullish candle enveloping a smaller previous bearish candle.
- Rising 3: Begins with a solid bullish candle, transitions through three minor bearish candles, and concludes with another bullish candle surpassing the initial high.
- 3 White Soldiers: Three consecutive robust bullish candles, each rising from within the previous candle's range.
- Morning Star: A sequence beginning with a dominant bearish candle, followed by a minor bearish, and concluding with a dominant bullish candle surpassing the midpoint of the first candle.
- Bullish Harami: A minor bullish candle contained within the body of the preceding bearish candle.
- Tweezer Bottom: Pair of candles with matching lows transitioning from bearish to bullish.
Understanding Bearish Patterns
- Hanging Man: Features a small upper wick and an elongated lower wick, indicative of bearish reversal.
- Shooting Star: Involves a small body and a long upper wick.
- Bearish Engulfing: Large bearish candle brick-walling a smaller preceding bullish candle.
- Falling 3: A strong bearish candle, followed by three minor bullish candles, finishing with another bearish candle that breaks prior lows.
- 3 Black Crows: Consists of three sequential bearish candles, each closing below the last.
- Evening Star: Starts with a strong bullish candle, moves to a small bullish candle, and ends with a bearish candle falling below the initial midpoint.
- Bearish Harami: A smaller bearish candle confined within a preceding bullish candle.
- Tweezer Top: Comprised of candles with identical highs, shifting from bullish to bearish.
Different Types of Trend Detection
The indicator continually displays the major trend, adapting its display based on the chosen detection method. Traders can also visualize the minor trend, and this option can be toggled for clarity using candle colors.
- Supertrend: Defines uptrends and downtrends based on the breaking of upper and lower bands.
- EMAs: Determines trends with the crossover of fast and slow exponential moving averages.
- ChoCh: Uses character change lines and labels to signify trend changes.
- Donchian Channel: Identifies trends by the breaking of highest and lowest value levels.
An example of the Change of Character method highlights its utility in trend detection:
Note: Each illustrated screenshot utilizes a different trend detection method. Browse through to identify the most suitable method for your strategy.
Optimizing Your Settings
- Candlestick Patterns: Opt for specific patterns to tailor your strategy.
- Minor Trend Length: Adjust the Donchian Channel length for minor trend monitoring.
- Major Trend Method: Choose your preferred method for major trend identification.
- Major Trend Parameters: Customize inputs for the selected trend method.
- Color Candles: Enhance clarity by coloring candles based on minor trends.
- Dashboard: Modify the alignment dashboard’s size and position for optimal visibility.
FAQ
1. How can I access the Candlestick Structure indicator?
You can get access on the LuxAlgo Library for charting platforms like TradingView, MetaTrader (MT4/MT5), and NinjaTrader for free.
2. What makes the Candlestick Structure indicator a valuable tool for trading?
The indicator's ability to align candlestick patterns with major market trends and the customizable options for trend detection methods make it an invaluable tool for traders aiming to enhance their market analysis.
Trading is risky and many will lose money in connection with trading activities. All content on this site is not intended to, and should not be, construed as financial advice. Decisions to buy, sell, hold or trade in securities, commodities and other markets involve risk and are best made based on the advice of qualified financial professionals. Past performance does not guarantee future results.
Hypothetical or Simulated performance results have certain limitations. Unlike an actual performance record, simulated results do not represent actual trading. Also, since the trades have not been executed, the results may have under-or-over compensated for the impact, if any, of certain market factors, including, but not limited to, lack of liquidity. Simulated trading programs in general are designed with the benefit of hindsight, and are based on historical information. No representation is being made that any account will or is likely to achieve profit or losses similar to those shown.
Testimonials appearing on this website may not be representative of other clients or customers and is not a guarantee of future performance or success.
As a provider of technical analysis tools for charting platforms, we do not have access to the personal trading accounts or brokerage statements of our customers. As a result, we have no reason to believe our customers perform better or worse than traders as a whole based on any content or tool we provide.
Charts used on this site are by TradingView in which the majority of our tools are built on. TradingView® is a registered trademark of TradingView, Inc. www.TradingView.com. TradingView® has no affiliation with the owner, developer, or provider of the Services described herein.
This does not represent our full Disclaimer. Please read our full disclaimer.
© 2025 LuxAlgo Global, LLC.