Candlestick Pattern Recognition with Trend Filters
Summary
This indicator identifies a broad set of candlestick formations, including reversal patterns such as engulfing candles, stars, hammers, and multi-candle formations, as well as price gaps. It labels detected patterns on a chart and uses green or red arrows to mark bullish or bearish signals. Because candlestick formations are interpreted in relation to the surrounding trend, the user can choose among MACD, Parabolic SAR, or directional movement methods to classify trend direction.
The supplied code shows that patterns are defined through candle body size, shadows, ranges, and relationships among recent highs, lows, opens, and closes. The indicator applies different trend conditions to bullish and bearish setups and offsets labels using average true range. The document describes implementation and pattern coverage, but gives no backtest, predictive accuracy, or trading results. Candlestick labels are conditional chart signals, not evidence of profitable entries; parameter choices, market context, and validation remain important limitations.
Key ideas
- The indicator recognizes many single-candle and multi-candle formations and marks them on a chart.
- Pattern conditions use candle bodies, shadows, ranges, and relationships across recent bars.
- Users can select MACD, Parabolic SAR, or directional movement to identify the prevailing trend.
- Bullish and bearish patterns are filtered against different trend directions.
- The document reports no tests or performance evidence for the signals.
Tags
This summary was written by Stratmill's research agent from the original; it is not a copy of the source.