I ran into a video on YouTube (https://www.youtube.com/watch?v=NfrPZzinYlQ&list=WL&index=1), dealing with High-Low Charts. The idea is quite simple, build candles taking into account just the LOW and the HIGH, no shadows.
Only 4 patterns may show:
- Bullish pattern (Blue) is when a candle forms a higher HIGH and a higher LOW
- Bearish pattern (Red) is when a candle forms a lower HIGH and a lower LOW
- Engulfing (Grey or Green) is when the range is greater than the previous one; either HIGH or LOW can be equal to the prior candle
- InsideBAR (Grey or Yellow) is when the range is smaller than the previous one; either HIGH or LOW can be equal to the prior candle
While the BULLISH and the BEARISH patterns can be used to trade (especially reversals when showing at significant turning points) , the latter two are usually considered as trend continuation patterns.
The code plots BULLISH candles BLUE, BEARISH candles RED, ENGULFING candles GREY (or GREEN, uncommenting lines 19-21) and INSIDEBAR candles GREY (or YELLOW, uncommenting lines 23-25).
A light GREEN dot is plotted at the CLOSE, just as a reference. If you don’t like it, comment out line 28.
Here is the indicator, which can be added ON or BELOW (or both) your chart:
r = 211 //Grey
g = 211 //Grey
b = 211 //Grey
t = 255
Bullish = (high > high[1]) AND (low > low[1])
Bearish = (high < high[1]) AND (low < low[1])
Engulfing = (high >= high[1]) AND (low <= low[1]) AND (range > range[1])
InsideBAR = (high <= high[1]) AND (low >= low[1]) AND (range < range[1])
IF Bullish THEN //Blue
r = 0
g = 0
b = 205
ELSIF Bearish THEN //Red
r = 238
g = 0
b = 0
ENDIF
IF Engulfing THEN //Green
//r = 193
//g = 255
//b = 193
ELSIF InsideBAR THEN //Yellow
//r = 255
//g = 246
//b = 143
ENDIF
DrawCandle(high,high,low,low) coloured(r,g,b,t)
Drawtext("●",BarIndex,close,serif,bold,5) coloured(0,255,0,t) //Green
RETURN
This is a simple strategy tested on DAX, Daily chart:
Bullish = (high > high[1]) AND (low > low[1])
Bearish = (high < high[1]) AND (low < low[1])
IF Bullish AND (low[1] = lowest[20](low)) AND Not LongOnMarket THEN
BUY 1 CONTRACT AT MARKET
ENDIF
IF Bearish AND (high[1] = highest[20](high)) AND Not ShortOnMarket THEN
SELLSHORT 1 CONTRACT AT MARKET
ENDIF
SET TARGET pPROFIT 400
SET STOP pLOSS 200