Candlestick Patterns with RSI Filter

The Candlestick Patterns with RSI Filter indicator provides a comprehensive scanning tool that identifies specific bullish and bearish price action formations while filtering them through Relative Strength Index (RSI) thresholds to pinpoint potential trend reversals.

Usage

This tool can be used to identify high-probability reversal setups by ensuring a candlestick pattern occurs when the market is in an overbought or oversold state. For example, a Bullish Engulfing pattern will only trigger a signal if the RSI is below the user-defined lower threshold (e.g., 30), suggesting the reversal is occurring from an exhausted bearish move.

Users can toggle specific patterns on or off based on their trading style:

• Bullish Patterns: Long Lower Shadow (LLS), Lower Doji (D), Bullish Harami (BH), and Bullish Engulfing (BE).
• Bearish Patterns: Long Upper Shadow (LUS), Upper Doji (D), Bearish Harami (BH), and Bearish Engulfing (BE).

Details

The script combines classic candlestick logic with momentum filtering and optional trend detection. It calculates the RSI and compares it against upper and lower bounds. Additionally, users can choose to filter signals based on the prevailing trend determined by the SMA50 or a combination of the SMA50 and SMA200. This ensures that reversal patterns are identified within the context of specific market structures, such as a Bullish Harami appearing during a downtrend at oversold RSI levels.

Settings

RSI Settings

• RSI Length: Determines the lookback period for the RSI calculation.
• Upper RSI limit: The threshold above which bearish patterns are validated (Overbought).
• Lower RSI limit: The threshold below which bullish patterns are validated (Oversold).

Logic Settings

• Detect Trend Based On: Allows users to filter patterns based on SMA50, a combination of SMA50/SMA200, or disable trend detection entirely.
• Pattern Toggles: Individual checkboxes for each of the 8 supported candlestick patterns to customize which signals appear on the chart.

FAQ

How do I access Candlestick Patterns with RSI Filter?

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

What do the labels on the chart represent?

The labels represent different patterns: BE for Engulfing, BH for Harami, LUS/LLS for Long Shadows, and D for Doji. The color indicates the sentiment (Green for Bullish, Red for Bearish).

Can I use this for intraday trading?

Yes, the indicator is compatible with any timeframe; however, the RSI length and trend detection settings should be adjusted to match the volatility of the specific timeframe being traded.