Hi to all,

I’m reading chapter 14 of John Carter’s “Mastering The Trade” (2nd edition), which describes a setup to open position after trend has changed and a three candle pattern has been formed.

For example, to go short following new trend when old trend was bullish, Carter says that you have to check for three consecutive lower closes, that means that reversal has been confirmed and trader has to go short at market.

At the same way, reversed rules are valid for bullish signal: after a reversal from a bearish to bullish, you have to check for three consecutive higher closes.

Carter adds a filter to avoid “Flags” (consolidation situations): in case of three lower closes, the close of the last two candles must be lower than the low of the first candle of the pattern; at the same way for bullish, the close of the last two candles must be higher than the high of the first candle of the pattern.

Using that rules, I tried to write an indicator that paint green (for bullish) an red (for bearish) arrows on the chart.

Note that when the first arrow is painted after a market reversal, You are on the market so You must ignore the following candles having the same color.

The original John Carter’s indicator for Trade Station put the signal to the first candle of the pattern. My indicator put the arrow to the third candle of the pattern, that is the entry candle.

Here’s the code:

//Author: Francesco
//Date: 05-03-2017

ATR = averagetruerange

//Three Bars Lower Closes
BearCondition = Close < Close[1] And Close[1] < Close[2] And (Close < Low[2] And Close[1] <Low[2])

//Three Bars Higher Closes
BullCondition = Close > Close[1] And Close[1] > Close[2] And (Close > High[2] And Close[1] > High[2])

//Go Short Signal
If BearCondition then
 TOPy = high
 TOPx = Barindex
 DRAWTEXT("˅",TOPx,TOPy+ATR/2,Dialog,Bold,20) coloured(200,0,0,255)
endif

//Go Long Signal
If BullCondition then
 BOTy = Low
 BOTx = Barindex
 DRAWTEXT("˄",BOTx,BOTy-ATR/2,Dialog,Bold,20) coloured(0,200,0,255)
endif

RETURN