Price Action is a Client Side VTL Indicator to display the important price action candle stick patterns; Pin Bars, Inside Bars and Engulfing Bars. The patterns are marked in chart by vertical lines below the candle chart in a new pane.
• Red – Pin Bars
• Green – Engulfing Bar
• Yellow – Inside Bar
The height of the vertical line shows the strength of each pattern with a scale 1 to 4. The pattern strength is calculated based on how the pattern is formed in relation to its adjacent four bars. The higher the line the stronger the pattern. Pattern Name and whether the pattern is bullish or bearish and pattern strength is displayed in the Data Window tab of the terminal.
Trading Strategies:
Pin Bars – Pin bars usually indicate trend reversal. When they are formed at support resistance levels, they generate strong signals. A bullish pin bar is formed at a support level and the pattern strength is 3 or 4, odds favor a price reversal. Trades can be opened above the high of the pin bar. When Bearish Pin bar is formed at resistance level and pattern strength reads 3 or 4, then short position can be opened on a break of the low of the Pin Bar.
Engulfing Bar: Similar to Pin bars, strong Engulfing bars formed at support or resistance levels are good trading signals. Open trades on breakout of the engulfing bar in the direction of the Engulfing Bar.
Inside Bar: Inside Bars represent consolidation. They are suitable for breakout trading. When a strong inside bar pattern is picked by the Price Action indicator, open new trades on breakout of the mother bar.
Price_Action_Indicator.zip (3.51 KB)