Three-Candle Reversal Signals with Tick-Volume Filtering

Summary

The ThreeCandles indicator identifies possible reversals from a sequence of three candlesticks and presents the signals with alerts. For a potential sell, two rising candles are followed by a falling candle whose body is larger than the preceding rising candle; the second rising candle must remain within the prior candle’s shadow. For a potential buy, the sequence is reversed: two falling candles, then a rising candle with a body larger than the previous falling candle, subject to the same shadow condition.

The indicator also evaluates tick volume changes and the size of the first candle. Volume analysis is disabled when that candle exceeds a configurable pip threshold. Candles are colored to distinguish movement with or against the indicated trend, and possible signals can trigger sound, email, or phone notifications. The document explains the rule design and its display features, but gives no backtest, accuracy estimate, or trading results. The patterns indicate possible turning points and do not establish that a reversal will follow; the described behavior may depend on settings and market context.

Key ideas

• A three-candle sequence is used to flag possible bullish or bearish reversals.
• The third candle must have a body larger than the preceding candle in the stated reversal patterns.
• The middle candle is constrained by the shadow range of the first candle.
• Tick-volume behavior and the first candle’s size can affect analysis.
• The document describes indicator rules but provides no evidence of predictive performance.

Tags

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