Jump to content

Welcome to the new Traders Laboratory! Please bear with us as we finish the migration over the next few days. If you find any issues, want to leave feedback, get in touch with us, or offer suggestions please post to the Support forum here.

  • Welcome Guests

    Welcome. You are currently viewing the forum as a guest which does not give you access to all the great features at Traders Laboratory such as interacting with members, access to all forums, downloading attachments, and eligibility to win free giveaways. Registration is fast, simple and absolutely free. Create a FREE Traders Laboratory account here.

parliament718

Identifying a Price Action Pattern - Examples Included

Recommended Posts

Hi,

Im trying to code a system based on a specific price action pattern. However Ive been trying a few days to accurately identify this pattern in code with little success. I can spot them out with the eye without a problem but I cant seem to figure out how to spot them in code because they come in slightly different shapes. Can somebody help out, some pseudo code or suggestions on how to approach is would really help.

 

Basically, the tunnel lines are just SMA's of the high and the low. Im looking for price to form this pattern and then close below the lower SMA for a short, or above the higher SMA for a long. The swings have to be well-defined (rather than "flat" waves, characteristic of consolidation zones). One of my attempts was to filter out these "flat" waves from the well-defined ones was by using an ADX filter.

 

Its most reliable when (for a short) during the 2nd wave the price comes out of the tunnel at the top (doesnt have to close above it) and then retreats back into the tunnel towards the bottom, and then closes below the bottom SMA.

 

There are of course other conditions and filters but this is somewhat the base of the system and Im having much trouble. Here's a compilation of examples.

 

uiLov.png

 

Thanks so much

Edited by parliament718

Share this post


Link to post
Share on other sites
Hi,

Im trying to code a system based on a specific price action pattern. However Ive been trying a few days to accurately identify this pattern in code with little success. I can spot them out with the eye without a problem but I cant seem to figure out how to spot them in code because they come in slightly different shapes. Can somebody help out, some pseudo code or suggestions on how to approach is would really help.

 

Basically, the tunnel lines are just SMA's of the high and the low. Im looking for price to form this pattern and then close below the lower SMA for a short, or above the higher SMA for a long. The swings have to be well-defined (rather than "flat" waves, characteristic of consolidation zones). One of my attempts was to filter out these "flat" waves from the well-defined ones was by using an ADX filter.

 

Its most reliable when (for a short) during the 2nd wave the price comes out of the tunnel at the top (doesnt have to close above it) and then retreats back into the tunnel towards the bottom, and then closes below the bottom SMA.

 

There are of course other conditions and filters but this is somewhat the base of the system and Im having much trouble. Here's a compilation of examples.

 

uiLov.png

 

Thanks so much

 

 

We can make this a community project.

 

can you pick one pattern,

 

then, use point form, name 5 characteristics about this pattern?

 

they should be the 5 critical characteristics of this pattern

ie they are your trigger pullers.

use arrows and lines and poiinters and notes to supplement your descriptions

Share this post


Link to post
Share on other sites

Thanks for your reply.

 

I think part of my problem is its hard to quantify the pattern, maybe this is actually where I need help rather than the code itself. The schematic below of some solid characteristics. Please keep in mind this particular occurance is basically a perfect setup and they rarely happen like this.

 

ZeKPa.png

 

1) L-H-HL for buy H-L-LH for sell

2) second wave typically retraces to 38%-78% fib before reversing again in the initial direction and closing over the SMA.

3)SMA crossing bar is "strong" but not so strong that it causes to miss much of the move. A range of the crossing candle's body of between 7-14 pips is a sufficient condition)

 

Since it comes in many shapes as seen in the previous compilation its hard to say other solid characteristics about the actual waves without making the definition so rigid that it misses perfectly valid setups. Perhaps theyre just less obvious. Here are some observations:

 

I just tried for the first time to run Fibonacci time retracements of the first wave. After looking back at 50-100 occurances that my eye spots out as having a good structure it seems that:

 

1) if the initial first wave is 7-15 (15M) bars of time, then the low/high of the following wave is usually in the 2nd - 3rd Fibonacci time zone

2) if the initial first wave is 16- 24 (15M) bars of time, then the low/high of the following wave is usually in the 1st - 2nd Fibonacci time zone.

 

3) if first wave is less than 7 (15M) bars of time, the pattern is usually too small

4) if the first wave is more than 25 (15M) bars of time, the pattern tends to be too big.

 

Perhaps a range for the initial first wave is also called for since without such a condition the code can be vulnerable to signal on "flat" consolidation waves. As I mentioned, I had some success filtering these out by ignoring signals with ADX < 20. Perhaps ATR might be useful in this regard too.

 

Thoughts?

Share this post


Link to post
Share on other sites
We can make this a community project.

 

 

 

Seems like there's no interest in a community project like this. If anyone is interested to work privately with me to build a system based on this feel free to message me.

 

Thanks

Share this post


Link to post
Share on other sites

Pattern identification is extremely hard and algorithms that do that efficiently are at the core of some commercial systems. In general, TA patterns are difficult to identify because of the imbedded randomness in the main pattern. Thomas Bulkowski has developed a program that does this and he offers it for free. You may want to contact him for general guidelines if he is available:

 

http://thepatternsite.com/patternz.html

 

Another guy who has developed an identification algorithm but for price patterns is Michael Harris. Although his program doesn't do what you are looking for his ideas have broader application:

 

The Most Advanced Tool for Analyzing Price Action and Discovering Trading Systems

 

I have seen some other programs but their identification ability is very poor. Check this website for an example of a screener where you can include TA patterns and indicators. Maybe you can contact them and get some direction:

 

Stock Screener - Overview

 

To summarize, what you are looking for is not very easy. A professional programmer of trading systems may charge up to $5,000 for the code. I paid much more for much simpler things 10 years ago.

Share this post


Link to post
Share on other sites
Pattern identification is extremely hard and algorithms that do that efficiently are at the core of some commercial systems. In general, TA patterns are difficult to identify because of the imbedded randomness in the main pattern. Thomas Bulkowski has developed a program that does this and he offers it for free. You may want to contact him for general guidelines if he is available:

 

http://thepatternsite.com/patternz.html

 

Another guy who has developed an identification algorithm but for price patterns is Michael Harris. Although his program doesn't do what you are looking for his ideas have broader application:

 

The Most Advanced Tool for Analyzing Price Action and Discovering Trading Systems

 

I have seen some other programs but their identification ability is very poor. Check this website for an example of a screener where you can include TA patterns and indicators. Maybe you can contact them and get some direction:

 

Stock Screener - Overview

 

To summarize, what you are looking for is not very easy. A professional programmer of trading systems may charge up to $5,000 for the code. I paid much more for much simpler things 10 years ago.

 

Checking back on this post now your comment helped me find two very useful articles for pattern recognition. One uses an algorithm called the PXtract algorithm:

 

PXTract Algo:

http://www.cse.ust.hk/~leichen/courses/comp630p/collection/reference-4-6.pdf

 

http://www.olsen.ch/fileadmin/Publications/Client_Papers//200405-Omrane-PredictiveSuccessProfitabilityChartPatterns.pdf

 

 

If somebody is interested to develop a pattern recognition system based on the pattern I described, then contact me. I now develop in a .NET-based Complex Event Processing (CEP) framework and software suite by Deltix. I prefer to work on systems in collaboration and besides, those articles are a bit much to digest because my math is a bit rusty these days. Hope to hear!

Share this post


Link to post
Share on other sites
Checking back on this post now your comment helped me find two very useful articles for pattern recognition. One uses an algorithm called the PXtract algorithm:

 

PXTract Algo:

http://www.cse.ust.hk/~leichen/courses/comp630p/collection/reference-4-6.pdf

 

http://www.olsen.ch/fileadmin/Publications/Client_Papers//200405-Omrane-PredictiveSuccessProfitabilityChartPatterns.pdf

 

 

If somebody is interested to develop a pattern recognition system based on the pattern I described, then contact me. I now develop in a .NET-based Complex Event Processing (CEP) framework and software suite by Deltix. I prefer to work on systems in collaboration and besides, those articles are a bit much to digest because my math is a bit rusty these days. Hope to hear!

 

The first article talks about the accuracy of the identification algorithm but not about the pattern performance. Also the authors state something peculiar that "We have demonstrated how to automate the process of chart pattern extraction and recognition, which has not been discussed in previous studies." but such software is available for at least 15 years! Then they refer to Thomas Bulkowski as Thomas! "According to Thomas [14], there are totally 47 different chart patterns, which can be extracted from the time series data". This is very strange. I doubt their algorithm will work because they do not sound familiar with this subject. Bulkowski has done much more work than them long time ago for chart patterns and Harris has done the same for price patterns:

 

http://thepatternsite.com/chartpatterns.html

The Most Advanced Tool for Analyzing Price Action and Discovering Trading Systems

 

those two are all you need.

Share this post


Link to post
Share on other sites
Checking back on this post now your comment helped me find two very useful articles for pattern recognition. One uses an algorithm called the PXtract algorithm:

 

PXTract Algo:

http://www.cse.ust.hk/~leichen/courses/comp630p/collection/reference-4-6.pdf

 

http://www.olsen.ch/fileadmin/Publications/Client_Papers//200405-Omrane-PredictiveSuccessProfitabilityChartPatterns.pdf

 

 

If somebody is interested to develop a pattern recognition system based on the pattern I described, then contact me. I now develop in a .NET-based Complex Event Processing (CEP) framework and software suite by Deltix. I prefer to work on systems in collaboration and besides, those articles are a bit much to digest because my math is a bit rusty these days. Hope to hear!

 

Would like to share idea on fractal pattern recognition. A lot of good traders are trading it at twitter

Share this post


Link to post
Share on other sites

Join the conversation

You can post now and register later. If you have an account, sign in now to post with your account.
Note: Your post will require moderator approval before it will be visible.

Guest
Reply to this topic...

×   Pasted as rich text.   Paste as plain text instead

  Only 75 emoji are allowed.

×   Your link has been automatically embedded.   Display as a link instead

×   Your previous content has been restored.   Clear editor

×   You cannot paste images directly. Upload or insert images from URL.


  • Topics

  • Posts

    • Date : 20th Sepember 2019. MACRO EVENTS & NEWS OF 20th Sepember 2019.FX News Today Overall dovish signals from central banks yesterday underpinned Asian markets, which are mostly posting fractional gains. Bund futures are fractionally higher in pre-market trading, while GER30 and UK100 futures are slightly lower. Japan inflation hit a two year low, with CPI excluding fresh food coming in at just 0.5%, in line with estimates and the lowest rate since 2017. BOJ: This may complicate the outlook for the BoJ, although excluding energy, prices actually nudged higher. The data will add to easing expectations after BoJ head Kuroda signalled a review of the overall situation and the impact of slowing world growth on price momentum in Japan. Brexit developments: Negotiators from both sides are set to meet today, after the European Commission confirmed that it received some technical papers on alternative arrangements to the backstop. German PPI inflation much weaker than expected at 0.3% y/y (median 0.6%). OECD cut its 2019 and 2020 outlooks for growth globally, and across most of the world, versus the prior May estimates. And it indicated growth is set to slip to its slowest since the financial crisis thanks to the trade tumult. Charts of the DayTechnician’s Corner GBPUSD rallied from 1.2490 to over 1.2570, a 2-month high after EU commission president Juncker told Sky News he believes “we can have a deal” on Brexit by October 31. It remains to be seen, how Mr. Juncker plans to make a deal, since there has been no movement from the EU side in months. Cable had been languishing in the upper 1.25s. USDJPY has again been range-bound through the session, sticking to a 107.90 to 108.08 trading band. Improved expectations for movement on the US-China trade war may limit USDJPY downside for now. Support comes at Monday’s 107.45 low, with Resistance at 108.50. Main Macro Events Today   Retail Sales ex Autos (CAD, GMT 12:30) – Retail sales and Core for August are seen steady, while the headline is anticipated to drop to 2.9% y/y from 3.3% and core to 2.5% from 2.9%. Support and Resistance levelsAlways trade with strict risk management. Your capital is the single most important aspect of your trading business.Please note that times displayed based on local time zone and are from time of writing this report.Click HERE to access the full HotForex Economic calendar.Want to learn to trade and analyse the markets? Join our webinars and get analysis and trading ideas combined with better understanding on how markets work. Click HERE to register for FREE!Click HERE to READ more Market news. Andria Pichidi Market Analyst HotForex Disclaimer: This material is provided as a general marketing communication for information purposes only and does not constitute an independent investment research. Nothing in this communication contains, or should be considered as containing, an investment advice or an investment recommendation or a solicitation for the purpose of buying or selling of any financial instrument. All information provided is gathered from reputable sources and any information containing an indication of past performance is not a guarantee or reliable indicator of future performance. Users acknowledge that any investment in FX and CFDs products is characterized by a certain degree of uncertainty and that any investment of this nature involves a high level of risk for which the users are solely responsible and liable. We assume no liability for any loss arising from any investment made based on the information provided in this communication. This communication must not be reproduced or further distributed without our prior written permission.
    • Hallo,  Freue mich hier sein zu können. Handel seit 7 Jahren. Sierra Chart ist meine bevorzugte Handelsplattform. NQ, ist mein Lieblings Asset   Gruss Thomas T.
    • Date : 19th Sepember 2019. MACRO EVENTS & NEWS OF 19th Sepember 2019.FX News Today The FOMC announcement that delivered the expected 25 bp cut that was widely expected, but didn’t signal further moves down the line. It repeated will act as appropriate to sustain expansion. BoJ held monetary policy on old for now, but flagged review in October. Australian Dollar slumped on the back of a rise in unemployment at 5.3% from 5.2%. Asian stock markets traded mixed, JPN225 gained 0.58%. The Japanese stock markets up from yesterday’s lows, but below the highs seen early in the session. EGBs rallied yesterday and are likely to remain supported going into today’s central bank announcements from BoE, Norges Bank and SNB . Brexit: UK given ultimatum to submit Irish border proposals by Sep 30. The focus now turns to central bank decisions in Europe, where BoE and SNB are expected to hold policy unchanged, while Norges Bank could dodge the trend and deliver a hike. Charts of the DayTechnician’s Corner YEN: The Yen posted fresh trend lows against the Dollar, though remained just off the lows it saw against the Euro, Australian Dollar and other currencies yesterday. USDJPY printed a 6-week high at 108.26 in what is now the fourth consecutive day of higher-high making. The Japanese currency has been deflating amid a persisting phase of risk-on conditions in global markets. Main Macro Events Today   Interest Rate Decision, Monetary Policy Statement (CHF, GMT 07:30) – The SNB kept policy on hold at the June council meeting. The Libor target was replaced with a key policy rate, but the central bank was adamant that the degree of monetary accommodation remains unchanged. After the ECB cut rates, while the Fed is now widely expected to ease rates, the SNB has little room to manoeuvre, especially against the backdrop of ongoing Brexit uncertainty and geopolitical trade risks. The SNB’s central message remains that the situation remains fragile and the currency “highly valued”. Interest Rate Decision, MPC Voting (GBP, GMT 11:00) – Shadowed by the ongoing political developments in Brexit, the BoE is not expected to proceed with any interest rate actions. Support and Resistance levelsAlways trade with strict risk management. Your capital is the single most important aspect of your trading business.Please note that times displayed based on local time zone and are from time of writing this report.Click HERE to access the full HotForex Economic calendar.Want to learn to trade and analyse the markets? Join our webinars and get analysis and trading ideas combined with better understanding on how markets work. Click HERE to register for FREE!Click HERE to READ more Market news. Andria Pichidi Market Analyst HotForex Disclaimer: This material is provided as a general marketing communication for information purposes only and does not constitute an independent investment research. Nothing in this communication contains, or should be considered as containing, an investment advice or an investment recommendation or a solicitation for the purpose of buying or selling of any financial instrument. All information provided is gathered from reputable sources and any information containing an indication of past performance is not a guarantee or reliable indicator of future performance. Users acknowledge that any investment in FX and CFDs products is characterized by a certain degree of uncertainty and that any investment of this nature involves a high level of risk for which the users are solely responsible and liable. We assume no liability for any loss arising from any investment made based on the information provided in this communication. This communication must not be reproduced or further distributed without our prior written permission.
    • Brain Trend Signal Alerts is Client Side VTL indicator that plots buy and sell signals. This follows the short-term trend and is a great intraday trading tool. The indicator identifies the trend changes using candle high lows and Average True Range.  The red arrow appears when a down trend is identified and green arrow appear when trend changes upward.     For best results, Brain trend alerts can be used together with a long term moving average like the 200 period simple moving average. Buy signals are valid when the signal is generated above the moving average and sell signals are valid when they form below the moving average.   The indicator writes the current signal and last trade details on the information panel on chart. When a new signal appear, it raise an alert. BrainTrendSignalAlerts.zip
    • Ichimoku Alert is based on the Ichimoku Cloud charts. This is a simplified VTL Alert based on price crossing the Kijun Sen of ichimoku chart. The Ichimoku Cloud is a type of chart used in technical analysis to display support and resistance, momentum, and trend in one view. The Ichimoku alert takes the Kijun Sen and raises an alert when price crossover happens. This should be used together with an ichimoku chart or other indicators. A signal in ichimoku alert means there is a high probability that a new price wave with momentum can form. For traders using ichimoku charts, these alerts inform them that a trend change is occurring in ichimoku chart and they can switch to ichimoku chart and analyse the situation. In trading ranges, this indicator generates whipsaw signals, so always use it together with other indicators or ichimoku chart. Ichimoku Cloud indicator is available in vStore. Ichimoku_Alert.zip
×
×
  • Create New...

Important Information

By using this site, you agree to our Terms of Use.