Testing One-Candle Returns Across High-Low and Candle-Color Patterns

Summary

This analysis classifies bars by whether their highs and lows rise or fall relative to prior bars, then splits each configuration by candle color. The resulting eight groups cover rising-range and falling-range patterns, wider-range engulfing bars, and narrower inside bars. For each group, the tool reports the count of successful outcomes, cumulative return, win percentage, and average return. Its stated simulation assumes buying at a qualifying candle’s close and holding for one candle, with a spread deduction in the calculations.

The material recommends using longer chart intervals because short-interval data is noisy and a one-bar holding period may be too brief to interpret. It provides indicator code rather than empirical results, so it does not establish that any pattern has predictive value. The code also contains inconsistent conditions in some inside-bar loss checks and labels in its outputs, which could make results unreliable without review. Treat the figures as exploratory and verify the implementation, costs, and testing assumptions before drawing conclusions.

Key ideas

• Bars are grouped by the direction of their highs and lows relative to preceding bars.
• Each of the four high-low configurations is separated by whether the bar closes up or down.
• The indicator reports outcome frequency, cumulative return, and average return for each group.
• Its proposed test buys at a qualifying close and holds for one bar, while subtracting a spread.
• The document warns that short timeframes are noisy and offers no evidence that the patterns predict returns.

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