Stocks & Commodities V. 23:7 (58-63): Targeting Your Pattern by Massimiliano Scorpio
Two-bar patterns: How to select, reorganize, and trade them.
Previously, my articles were focused on finding your favorite configurations using EasyLanguage (EL). I started using a very simple methodology (the reversal pattern) and then continued observing the relationship
between the open and the close, respective to the previous bar (hot zones).
In this article I use a more sophisticated approach to
show a “complete” way to select, recognize, and come
up with statistics on specific two-bar patterns. You will
see how every bar, on any time frame, can be “scanned” using the EL code and provide some useful information to make your decisions more objective. The basic code is completely disclosed, so you have the flexibility to personalize and implement it, especially with regard to the statistical inputs.
In my quest to easily understand market behavior, I found that I needed an extremely objective approach to make sure that everyone could come up with the same conclusions I did.
Starting from the same point that I did in the hot zones article, I created a specific algorithm to compare each
of the single elements of a market bar (open/high/
low/close) with the previous bar range and place it
in a well-defined zone.