MT4 Candlestick Analysis Indicator
Author: Jeremy Mitting
The Candlestick Analysis Custom Indicator identifies the more popular candlestick patterns (all listed with calculations below). A text object with the name of the identified candle pattern is placed above the candle.
The indicator works on any time frame with any pair.
Candlestick patterns are based on the following input parameters:
- WickMultiple — The wick multiple determines the length of the wick in relation to the candle body. The wick multiple is defaulted at 2. The hammer, for instance, has a lower wick twice the size of its body.
- CandleMultiple — This will determine the size of the candle body in relation to the wick. The candle multiple is defaulted at 2. The black candle, for instance, has a body twice the length of the upper and lower wicks.
- Candle_Accuracy — Candle accuracy is a price range used to determine how accurate we want the candle detection to be. The higher the number entered, the larger the range, the less accurate the candlestick analysis.
- period_range — Some candle patterns are partly determined by whether they are the lowest low or highest high for a period range. The user determines the period range. For instance, the hammer is the lowest low for a period range. The candlestick calculations below explain if period range is used.
- CandleFontSize — The font size in the text objects above each recognized candle pattern is determined by the user. This is defaulted at font size 7.
The remaining input parameters are the candlestick patterns that are recognized in the program; see below for a complete list with calculations. The parameters allow the user to decide what colour the candle patterns are. If none is chosen, the pattern will not appear.
The following candle types are identified, with calculations explained. All candlestick patterns have candle accuracy built into them:
- Black (White) Candle – the closing (opening) price is higher than the opening (closing) price, the candle body is defaulted to twice the length of both the upper and lower wicks
- Spinning Top – Upper and lower wicks are defaulted to a candlestick multiple of greater than twice the size of the candle.
- Doji – Either the opening price is greater than the closing price, but when multiplied by candlestick accuracy the closing price is greater than opening price. Or the closing price is greater than the opening price and multiplied by candlestick accuracy, the opening price is greater than the closing price.
- Hammer (Hangman) – The lower wick is greater by the candlestick multiple, defaulted at twice the candle body. The candle low (high) is also the lowest low (highest high) in the period range specified.
- Shooting Star (Inverted Hammer) – The upper wick is greater by the candlestick multiple, defaulted at twice, than the candle body. The candle high (low) is also the highest high (lowest low) in the period range specified.
- Bullish (Bearish) Engulfing – The current close (open) is greater than the current open (close). Last period’s open (close) is greater than last period’s close (open). Last period’s close (open) is greater than the current period open (close). Current period close (open) is greater than last period’s open (close). Last period’s open (close) is greater than the current period open (close). The candle low (high) is also the lowest low (highest high) in the period range specified
- Piercing Pattern – Last open is greater than last close. Last open is greater than current close. Last close is greater than current open. Current close is greater than current open. Current close is greater than last close plus half of the candle body for the prior period. The iADX indicator is used to determine a downward trend.
- Dark Cloud Cover – Current open is greater than current close. Last close is greater than last open. Last close is greater than current close. Current close is greater than last open. Last open plus half the prior candle body is greater than current close. The iADX indicator is used to determine an upward trend.
If you would like to see more of a technical explanation, including code samples of the most important parts of the indicator, please visit my post on the MT4 Candlestick Indicator.