Hi, can anyone suggest a good 3 bar reversal pattern indicator? Thank you.
If you describe the pattern in detail, I may write one for MT4 in some spare time 
Hello, the first half of this video basically explains the 3 bar pattern; when the 3rd bar closes it should trigger an alert symbol (like an arrow or similar)… thanks
Define “large candle”. Is it based on ATR? fixed pips?
Hi, the large candle (the 3rd bar) must close below the low of the 2nd bar (short trade) and must close above the high of the 2nd bar (long trade)
Yes, but video states, that first cnadle needs to be a large one - how you define a large candle?
Ok, perhaps an inputs could be included to specify the minimum size of the 1st candle’s body (OpentoClose) and the minimum size of the 3rd candle’s body (OpentoClose). The size range could be 0-100pips.
Do you use MT4 or tradingview? I have one for tradingview.
Hi, I only use MT4
TBAR.ex4 (14.2 KB)
Here is first version, it takes two inputs FirstCandleATRMulti and ThirdCandleATRMulti to control the relative minimum size of first and third candle. Value 1 will mean, that candle body needs to be at least equal to ATR(14) * 1.
Hi, thank you very much. I will check it and come back to you soon.
Hi, I installed the indicator but don’t see any alerts; I don’t really know how it should work.
As you see in the attached image we have 3 bars, and for the alert the 3rd bar must close above the high of the 2nd bar (long trade)
The 2nd bar has a Close lower than the Close of the 1st bar. It also has a Low which is lower than the 1st and 3rd bars.
These are basic rules. Of course we can also add inputs for the minimum size of the body (Open to Close) for each of the 3 bars (measured in pips).
There are no “alerts” this is indicator which shows the formation on chart using arrows (green and red) - check input settings. These are 1.5 ATR on default, you can lower it to 1 or even 0.5 to see it;s working
yes, i changed ATR to 0.5 and know i can see some arrows on my chart;
however, i’m not sure using ATR is the best for a ‘3 bar reversal pattern’
it should be based on price action only; the three bars must form a triangle with the 2nd bar having the lowest low…and a Close lower than the 1st bar (if we are looking for a 3 bar pattern for a long trade); then the 3rd bar’s Close must be higher than the high of the 2nd bar.
As mentioned, if we can then add inputs for the minimum size of the body (Open to Close) for each of the 3 bars (measured in pips) we can then ensure the the bars are not too small (especially for bars 1 and 3).
Hi again, here are the basic trading rules…
LONG SETUP
- Bar 1 closes down
- Low of Bar 2 is below the low of Bar 1 (and Bar 3)
- Bar 3 closes above the high of Bar 2
- Place arrow at the close of Bar 3
SHORT SETUP
- Bar 1 closes up
- High of Bar 2 is above the high of Bar 1 (and Bar 3)
- Bar 3 closes below the low of Bar 2
- Place arrow at the close of Bar 3
Set ATR Multi for 0 in both inputs and this will work exactly like these basic trading rules. Yet I would say you need to have SOME sort of filter for first candle, as above rules you’ve written will end up with very poor signals which will not be 3 bar reversal You need to be precise for what you want.
I think the rules I provided form the basic rules for a 3 bar reversal pattern indicator (with added inputs for the minimum size of each bar).
If it then triggers too many poor signals and/or too many signals then I can think of ways to reduce them.
Is this something you can program, in your spare time, when you are free?
Not sure, if I’ve written this clearly enough. Apologies for confusion.
If you set ATR multipliers to 0 (zero) indicator should work exactly as you have described in post #15
Sorry, I caused the confusion; you are right, if ATR is zero the indicator works as I described (well, it seems that way);
But I do think there should be inputs for the min. size of the body (Open to Close) for each of the 3 bars (measured in pips), range 0-100pips.
Also, because we are looking for a ‘reversal’ in price we don’t want an arrow for a long trade when price is already in an up trend (or an arrow for a short trade when price is already in a down trend).
The trend could be identified using a moving average. If price is above the MA then price is in an up trend. If price is below the MA price is in a down trend.
The user input for the MA should be a 50ma (MA Method=Exponential; Apply To=Close); the user input should be implemented so that the MA value can also be changed by the user to say 40, 30 etc.)
So, just to recap; if price is ‘above’ the MA then only an arrow (red) for a short trade is allowed.
Then, if price is ‘below’ the MA then only an arrow (green) for a long trade is allowed.
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