Three Inside Down Candlestick Reversal Backtest

Summary

The document describes a three-candle bearish reversal setup. It looks for a bullish first candle followed by a bearish harami, then a bearish candle that closes below the prior candle. The script marks the pattern and uses a strategy position variable to trigger entries and exits, with configurable take-profit and stop-loss distances. The stated settings are expressed in pips, but the document does not specify a market or timeframe for applying them.

The source is presented as an educational open-source script, with no performance report or empirical results included. Its implementation deserves careful review: despite the bearish pattern description, the code submits a long entry, and its plotted position logic may not correspond to the described short reversal. The fixed pip thresholds may also behave differently across instruments. Treat the pattern definition as the main instructional content and verify the entry direction, exit behavior, and instrument-specific settings before interpreting any backtest.

Key ideas

• The setup identifies a bullish candle, an engulfed bearish candle, and a confirming bearish close below the prior close.
• The script defines take-profit and stop-loss distances in pips.
• The source submits a long order despite describing a bearish reversal pattern.
• No measured performance, instrument, or timeframe is provided.

Tags

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