Discussing the article: "Price Action Analysis Toolkit Development (Part 26): Pin Bar, Engulfing Patterns and RSI Divergence (Multi-Pattern) Tool"

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Check out the new article: Price Action Analysis Toolkit Development (Part 26): Pin Bar, Engulfing Patterns and RSI Divergence (Multi-Pattern) Tool.

Aligned with our goal of developing practical price-action tools, this article explores the creation of an EA that detects pin bar and engulfing patterns, using RSI divergence as a confirmation trigger before generating any trading signals.

Candlestick patterns are a type of chart used in technical analysis to analyze price movements in financial markets. They visually represent the open, high, low, and close prices of a market over a specific period, offering insights into potential market direction and sentiment. There are many candlestick patterns available, but as mentioned in this article, we are focusing on two main patterns: the pin bar and the engulfing pattern. These patterns can appear as a single or two candles on higher timeframes, or as multiple candles on lower timeframes. Let's look at the presentation below, where I will explain in detail to help you understand what I mean.

The first diagram (Fig. 1) illustrates a bearish engulfing pattern on the M30 timeframe. It consists of two candles: the first is a bullish candle with a small body, followed by a bearish candle with a larger body that engulfs the previous bullish candle.

Fig. 1. Bearish Engulfing M30

Author: Christian Benjamin