Candlestick Reversal Signals

The Candlestick Reversal Signals indicator automatically identifies and labels Bullish/Bearish Engulfing and Harami patterns to highlight potential trend reversals on the chart.

Usage

The script is designed for immediate visual identification of four major candlestick patterns. When a pattern is detected, a label is plotted above or below the relevant candle to signal a potential shift in market sentiment.

• Bullish Engulfing: A green label appears below the bar when a candle completely engulfs the body and range of the previous candle, suggesting a potential upward reversal.
• Bearish Engulfing: A red label appears above the bar when a candle completely engulfs the previous candle, suggesting a potential downward reversal.
• Bullish Harami: A green label appears below the bar when a small bullish candle is contained within the body of a larger previous bearish candle.
• Bearish Harami: A red label appears above the bar when a small bearish candle is contained within the body of a larger previous bullish candle.

Traders can use these signals to confirm entries at support/resistance levels or as part of a broader price action strategy.

Details

The indicator logic focuses on the relationship between the open and close prices of the current and previous candles:

• Engulfing Logic: The current candle must have a close higher than the previous open and an open lower than the previous close (for bullish), while also ensuring the entire previous body is eclipsed by the current one.
• Harami Logic: This implementation focuses on the candle bodies. A bullish harami requires the previous candle to be bearish, with the current bullish candle's body sitting entirely within the previous candle's body range.

The script uses plotshape with the labelup and labeldown styles to ensure signals are clearly visible without obstructing the price action itself.

Settings

• Bullish Engulfing Color: Customizes the color of the label used for bullish engulfing signals (default is green).
• Bearish Engulfing Color: Customizes the color of the label used for bearish engulfing signals (default is red).
• Bullish Harami Color: Customizes the color of the label used for bullish harami signals (default is green).
• Bearish Harami Color: Customizes the color of the label used for bearish harami signals (default is red).

FAQ

How do I access Candlestick Reversal Signals?

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

Can I use these signals on any timeframe?

Yes, candlestick patterns like Engulfing and Harami are fractal and can be applied to any timeframe, though they are often considered more reliable on higher timeframes like H4 or Daily.

Does this indicator provide alerts?

Yes, the script includes built-in alert conditions for each of the four patterns, allowing you to receive notifications the moment a reversal pattern is confirmed on the bar close.