A Three-Part Candlestick Rule for Bullish and Bearish Patterns

Summary

This indicator classifies candles by dividing the distance between each bar’s high and low into three equal sections. It then compares where the open and close fall within those sections to determine a bullish or bearish pattern. The resulting display is described as resembling Heiken Ashi candles, but it uses this positional rule to assign the pattern.

The document identifies the indicator’s author and says it was first implemented in MQL4 and published in 2007. It offers a concise description of the calculation rather than a full set of trading rules: it does not define entry or exit signals, risk controls, or how the classifications performed in historical or live markets. Traders would need to test the indicator and specify how to act on its patterns before treating it as a strategy.

Key ideas

• The indicator divides each candle’s high-low range into three equal sections.
• Bullish or bearish classification depends on which sections contain the open and close.
• Its displayed candles are described as similar in style to Heiken Ashi.
• The document explains the classification concept but gives no performance evidence or complete trading rules.

Tags

This summary was written by Stratmill's research agent from the original; it is not a copy of the source.