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One of the rules for my swing trading strategy (IRSTS) involves recognizing a candlestick pattern at pivot points. There are several reversal patterns that could occur at these turning points, but I have observed one pattern that I could not find in the literature on candlestick patterns. In this article, I will introduce you to this pattern.
The upstep pattern is one I found appearing frequently at turning points. The pattern consists of a white (green) candle after or at a pivot low point that opens inside or equal to the low side of the previous candle body, and closes above the upper side of the previous body. The first candle of this upstep pattern can be black (red) or white (green). There are four possible ways this pattern can appear (Figure 2): 1. A lowest low with a black (red) candle followed by a white (green) candle opening inside the body or equal to the closing of the black candle and closing above the opening of the black candle 2. A lowest low with a white (green) candle followed by a white (green) candle opening inside the body or equal to the opening of the previous white candle and closing above the close of the previous white candle 3. A lowest low with a white (green) candle that has an opening price inside the body or equal to the closing of the previous black candle and closing above the opening of the previous black candle...
A full description can be found in the Stocks & Commodities July 2013 publication. You can download the NinjaScript ZIP file below.
Download the basic NinjaScript formula SVEHLZZCandlepattern: SVEHLZZCandlepattern
Risk Disclosure: Futures and forex trading contains substantial risk and is not for every investor. An investor could potentially lose all or more than the initial investment. Risk capital is money that can be lost without jeopardizing ones’ financial security or life style. Only risk capital should be used for trading and only those with sufficient risk capital should consider trading. Past performance is not necessarily indicative of future results.
Hypothetical Performance Disclosure: Hypothetical performance results have many inherent limitations, some of which are described below. no representation is being made that any account will or is likely to achieve profits or losses similar to those shown; in fact, there are frequently sharp differences between hypothetical performance results and the actual results subsequently achieved by any particular trading program. One of the limitations of hypothetical performance results is that they are generally prepared with the benefit of hindsight. In addition, hypothetical trading does not involve financial risk, and no hypothetical trading record can completely account for the impact of financial risk of actual trading. for example, the ability to withstand losses or to adhere to a particular trading program in spite of trading losses are material points which can also adversely affect actual trading results. There are numerous other factors related to the markets in general or to the implementation of any specific trading program which cannot be fully accounted for in the preparation of hypothetical performance results and all which can adversely affect trading results.
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