Discussing the article: "Encoding Candlestick Pattern (Part 6): Developing the Encoded Sequence Indicator"

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Check out the new article: Encoding Candlestick Pattern (Part 6): Developing the Encoded Sequence Indicator.

An on-chart MQL5 indicator generates a live stream of encoded candlestick symbols and a frequency report for the last N bars. It supports color customization and type filtering, and uses A/a, H/h, E/e, G/g, D, and N/n classifications. Traders can quickly review occurrences and common sequences directly on the chart.

The visual representation of the encoded sequence introduces a different way of reading price action. Instead of relying exclusively on the traditional appearance of candlesticks, traders can observe the symbolic structure generated from the classification rules.

For example, a sequence such as AAHnN can be interpreted as a sequence of classified bullish, unclassified  bearish, and bullish candlestick structures according to the taxonomy established in this series.

The significance of this approach is not necessarily in the individual symbols themselves, but in the relationships and sequences formed by consecutive symbols. A trader may begin to recognize recurring combinations, transitions, or clusters that are difficult to identify when looking only at the graphical shape of conventional candlesticks.

Consequently, the encoded chart can be viewed as a kind of market language, where each candlestick contributes a character, and consecutive candlesticks form words or sequences that can be statistically investigated. 

Figure 1 compares the chart before and after applying the indicator. The enhanced chart displays alphabetic symbols representing candle types, revealing the encoded language of the market.

A: Before the indicator is applied to the chart

B: After the indicator is applied to the chart

Author: Daniel Opoku