Three Inside Up Candlestick Pattern Backtest Logic

Summary

The document presents a three-candle bullish reversal pattern: a bearish candle is followed by a smaller bullish candle contained within the prior candle’s range, then an upward candle that closes above the preceding close. It includes a Pine Script strategy with configurable take-profit and stop-loss distances and chart coloring intended to highlight pattern and position states.

The implementation appears inconsistent with the named bullish setup. When its pattern conditions are met, the script assigns a position state that triggers a short entry, and its profit and stop checks operate on a stored price value. The listed pip-based settings may also depend on the traded market and instrument conventions. No backtest results or evidence of profitability are supplied, and the accompanying disclaimer frames the code as educational. Users should inspect the execution and exit logic before interpreting its chart markings or strategy report.

Key ideas

• The named pattern uses a bullish harami in the first two candles followed by an upward confirmation candle.
• The script exposes take-profit and stop-loss distance inputs and colors chart bars.
• Despite the bullish pattern name, the code routes its detected setup into a short entry.
• The pip-based exit settings may need market-specific interpretation.
• The document provides no performance results and describes the script as educational.

Tags

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