Reversal trading logic
Would using just 3 bars typically be considered too little context for reliable signals?
I was thinking of using multiple time frames in this analysis such as daily, 12h, 8h, 6h, 4h, 3h, 2h, 1h, 30 min, 20 min, 15 min, 12 min, 10 min, 6 min, 5 min, 4 min, 3 min, 2 min, and 1 min. The reason for this is because when I have looked at historical data. The high and low of the day is always shared with the high and the low of it's smaller time frames. Would there be a better and more accurate way to perfecr reversals? Thank you for all your help and kindness. I have also seen the reversal or continuation signal on the daily time frame is shared for the entry signal of the smaller time frames.
If the entire signal logic only encompasses 3 bars in total, you will likely have a lot of losses unfortunately. Many indicators find the trend by constantly examining market prices bar by bar, and trend following indicators are built with sophistication for reliably seeking the true trend. In this case you're not using an indicator, and arbitrarily taking a gamble on 3 bars of analysis. Volume on the current bar is also always chaotic moving up and down constantly.
I understand, thank you for explaining it to me. I was thinking of using multiple time frames in this analysis such as daily, 12h, 8h, 6h, 4h, 3h, 2h, 1h, 30 min, 20 min, 15 min, 12 min, 10 min, 6 min, 5 min, 4 min, 3 min, 2 min, and 1 min. The reason for this is because when I have looked at historical data. The high and low of the day is always shared with the high and the low of it's smaller time frames. Would there be a better and more accurate way to perfecr reversals? Thank you for all your help and kindness. How can one understand the current market volume correctly if it is too chaotic to trust it's accuracy?
I understand, thank you for explaining it to me. I was thinking of using multiple time frames in this analysis such as daily, 12h, 8h, 6h, 4h, 3h, 2h, 1h, 30 min, 20 min, 15 min, 12 min, 10 min, 6 min, 5 min, 4 min, 3 min, 2 min, and 1 min. The reason for this is because when I have looked at historical data. The high and low of the day is always shared with the high and the low of it's smaller time frames. Would there be a better and more accurate way to perfecr reversals? Thank you for all your help and kindness. How can one understand the current market volume correctly if it is too chaotic to trust it's accuracy?
Colin Kimble:
Hi! I wanted to ask if someone could spot my 'logic' with regards to perfecting reversals wether bullish or bearish.
Bearish reversal:
Bullish reversal:
Obviously this isn't the code but a simple rough draft of the logic. Is my understanding of reversals correct or incorrect with regards to perfecting these techniques?
Hell, Mr. Kimbe,
For a comprehensive Trend reversal patterns detection logic you might need to define helpers to check for each one of the intended candlestick patterns, however considering the method of approach above; here's and actual reversal pattern detection logic:
//--- check Morning Doji (Buy reversal) if((Open(3)-Close(3)>AvgBody(1)) && // bearish candlestick, its body is larger than average (MathAbs(Close(2)-Open(2))<AvgBody(1)*0.1) && // second candlestick body is doji (less than one tenth of the average candle body) (Close(2)<Close(3)) && // second candlestick close is lower than first candlestick close (Open(2)<Open(3)) && // second candlestick open is lower than first candlestick open (Open(1)>Close(2)) && // upward price gap on the last candlestick (Close(1)>Close(2))) // last candlestick close higher than second candlestick close //--- check Evening Star (Sell Reversal) if((Close(3)-Open(3)>AvgBody(1)) && // bullish candlestick, its body is larger than average (MathAbs(Close(2)-Open(2))<AvgBody(1)*0.5) && // second candlestick body is short (less than a half of the average candle body) (Close(2)>Close(3)) && // second candlestick close is higher than first candlestick close (Open(2)>Open(3)) && // second candlestick open is higher than first candlestick open (Close(1)<MidOpenClose(3))) // last candlestick close is lower than the middle of the first (bullish) one
Notice that that for the candlestick pattern to be considered a signal in the first place there are more factors to consider than just it appearance (e,g. it size relative to other candlesticks, the area on the chart).
Therefore, you might want to take a more robust approach so that your pattern detection and confirmation logic would allow for variation and flexibility.
I'll gladly help if you wish.
Improperly formatted code edited by moderator. Please always use the CODE button (Alt-S) when inserting code.
Hell, Mr. Kimbe,
For a comprehensive Trend reversal patterns detection logic you might need to define helpers to check for each one of the intended candlestick patterns, however considering the method of approach above; here's and actual reversal pattern detection logic:
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Hi! I wanted to ask if someone could spot my 'logic' with regards to perfecting reversals wether bullish or bearish.
Bearish reversal:
Bullish reversal:
Obviously this isn't the code but a simple rough draft of the logic. Is my understanding of reversals correct or incorrect with regards to perfecting these techniques?