Classifying TheStrat Candles with Range and Moving-Average Rules

Summary

This indicator labels price bars using comparisons between each bar’s high and low and those of the preceding bar. It distinguishes inside bars, outside bars, bars making both a higher high and higher low, and bars making both a lower high and lower low. The labels use different colors, while an adjustable moving average determines whether inside and outside bar labels appear above or below the candle. A spacing setting controls label placement.

The document presents the indicator as a visualization aid for TheStrat price-action approach; it does not specify trading entries, exits, or position management. No backtest or evidence of predictive performance is included. The displayed rules also leave some bars unlabelled, including cases not matching the four range patterns, and the moving average affects only label placement rather than validating a directional signal. The content is therefore useful for understanding a candle classification scheme, but not as evidence that the labels alone form a profitable strategy.

Key ideas

• An inside bar has a narrower range than the previous bar, while an outside bar extends beyond it on both sides.
• The indicator separately identifies bars with higher highs and lows or lower highs and lows.
• A moving average positions inside and outside labels relative to the candle.
• The indicator visualizes bar structure but does not define a complete trading strategy.
• No performance testing is reported.

Tags

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