Three-Candle Reversal Patterns Filtered by Dual Moving Averages

Summary

This strategy combines bullish Three White Soldiers and bearish Three Black Crows candle sequences with two moving-average filters. A long signal requires three rising bullish candles and a close above both averages; a short signal requires three falling bearish candles and a close below both. The moving averages use a configurable price source and can be selected from eight types, including SMA, EMA, DEMA, HMA, VAR, ZLEMA, WMA, and RMA. The stated defaults use highs as the source, a 22-period SMA, and a 210-period ZLEMA.

An optional cooldown blocks repeat entries in the same direction for a specified number of bars, set to 212 by default. The script submits market strategy entries and plots the two averages. It does not define explicit stop-loss or profit-target rules, and the supplied material gives no backtest data that would independently establish performance. The accompanying claim of strong FIL returns is promotional and cannot be assessed from the code excerpt; results would depend on instrument, timeframe, execution assumptions, and parameter choices.

Key ideas

• Bullish and bearish entries require three consecutive candles in the corresponding direction with progressively higher or lower closes.
• Both moving averages must confirm the signal direction before an entry is placed.
• The user can choose among eight moving-average calculations and adjust their lengths and price source.
• An optional bar-based cooldown limits repeated signals in the same direction.
• The document supplies no independently verifiable performance analysis or explicit stop and target rules.

Tags

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