Candlestick Pattern Breakouts with Two-Bar Confirmation

Summary

This strategy combines candlestick pattern recognition with breakout entries. It identifies Doji, Hammer, and Pin Bar candles using body and wick proportions. For its general directional setup, it looks for a bullish or bearish candle, a close beyond the preceding candle’s high or low, and a confirming candle in the same direction. It also enters on breakouts associated with the three named patterns and uses a configurable lookback to set recent high or low reference levels.

The document describes a lookback default of 20 periods and published daily ETH/USDT backtest settings, but gives no performance results. Its code and prose do not fully align: the pattern entries trigger on a pattern candle breaking the prior candle’s range, rather than the described dual-candle confirmation. The reference levels and colored chart boxes are not paired with explicit exit orders in the shown code. The document flags false breakouts in volatile markets, slippage in illiquid markets, and reversal signals against strong trends; it suggests volume, volatility-based stops, and trend filters for further evaluation.

Key ideas

• Doji, Hammer, and Pin Bar patterns are defined through candle body and wick proportions.
• The general long and short setups use a preceding candle breakout followed by a same-direction confirmation candle.
• Pattern-specific entries trigger when a recognized pattern candle closes beyond the preceding candle’s high or low.
• A configurable lookback supplies recent high and low reference levels, but the shown code does not use them for explicit exits.
• The document reports backtest settings but no performance results, and identifies volatility, slippage, and trend reversals as risks.

Tags

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