Engulfing Pattern & Impulse [UAlgo]

19 godzin temu

The Engulfing Pattern & Impulse [UAlgo] is a tool designed for technical traders who utilize price action and volume analysis to assess market trends and potential reversals. This indicator identifies two powerful trading signals: Engulfing Patterns and Volume Impulses, which are essential components for evaluating potential bullish or bearish market momentum.

Engulfing Patterns are classic candlestick formations often associated with reversals or trend continuations, depending on the overall trend context. This indicator highlights both bullish and bearish engulfing patterns based on configurable criteria such as trend detection settings, comparison with average body size, and a customizable body multiplier for validation. The Volume Impulse feature signals moments of significant volume compared to historical levels, which often precede substantial price movements. Together, these features provide traders with a versatile tool for better timing entry and exit points.

The indicator also offers an adaptive trend detection system, allowing traders to choose from multiple methods (e.g., SMA50 or SMA50/SMA200 combinations) to assess the trend context, making it ideal for various market conditions.



🔶Key Features

Engulfing Pattern Detection: Identifies bullish and bearish engulfing patterns with customizable parameters, including body length and average size comparison.

Configurable trend basis: Choose between SMA50 or SMA50 with SMA200 to define trend direction.

Body size multiplier: Adjust the size threshold for valid engulfing patterns, providing flexibility based on market conditions.

Volume Impulse Signal: Highlights volume spikes that meet or exceed a specified multiplier, which can indicate increased buying or selling interest.

Customizable volume period and multiplier: Allows you to tailor the volume impulse detection based on the instrument’s average volume behavior.

Trend Detection Options: Select different trend detection methods to suit various trading styles and instruments.

SMA50-based detection: Classifies the trend based on the position of price relative to the 50-period SMA.

SMA50 and SMA200 combination: Incorporates a dual-moving average approach, classifying trends based on the relationship between price, SMA50, and SMA200.

Enhanced Visualization: Distinguishes bullish and bearish signals with customizable colors, providing clear and immediate visual cues for easy interpretation.

Custom label colors: Allows you to set distinct colors for bullish, bearish, and neutral signals for quick identification.
Pattern filtering: Enable or disable specific patterns (Bullish, Bearish, or Both) based on your trading preferences.

🔶 Interpreting Indicator

Bullish Engulfing Pattern: Indicates a potential bullish reversal in a downtrend. This signal occurs when a white candlestick with a body size exceeding a specified multiplier completely engulfs the previous black candlestick. The pattern will display a “BE” label below the candle if it meets the criteria, signaling potential upward momentum.

Bearish Engulfing Pattern: Indicates a potential bearish reversal in an uptrend. A black candlestick with a body size exceeding the specified multiplier fully engulfs the previous white candlestick, signaling possible downward movement. The “BE” label appears above the candle to denote this pattern.

Volume Impulse Up: Displays a “VI” label below the candle when the volume surpasses the defined multiplier, and the price closes higher than it opened, indicating strong upward buying interest.

Volume Impulse Down: Displays a “VI” label above the candle when the volume meets or exceeds the specified threshold, and the price closes lower than it opened, signaling strong selling pressure.

Indicator uses the SMA50 and SMA200 to determine trend direction due to their popularity in technical analysis as indicators of medium- and long-term trends. The SMA50 reflects the average price over the past 50 periods, providing insight into intermediate trends, while the SMA200 is often used to identify the broader trend direction. These SMAs help traders quickly assess whether the market is in an uptrend, downtrend, or consolidation phase, enhancing decision-making for both short-term and long-term strategies.



🔶 Disclaimer

Use with Caution: This indicator is provided for educational and informational purposes only and should not be considered as financial advice. Users should exercise caution and perform their own analysis before making trading decisions based on the indicator's signals.

Not Financial Advice: The information provided by this indicator does not constitute financial advice, and the creator (UAlgo) shall not be held responsible for any trading losses incurred as a result of using this indicator.

Backtesting Recommended: Traders are encouraged to backtest the indicator thoroughly on historical data before using it in live trading to assess its performance and suitability for their trading strategies.

Risk Management: Trading involves inherent risks, and users should implement proper risk management strategies, including but not limited to stop-loss orders and position sizing, to mitigate potential losses.

No Guarantees: The accuracy and reliability of the indicator's signals cannot be guaranteed, as they are based on historical price data and past performance may not be indicative of future results.