The Bottle Pattern Recognition in TradingView
Coding a Bottle Candlestick Pattern Scanner in TradingView
Candlestick patterns are a great addition to market analysis. Some may even consider them vital in research and trading. This article presents the Bottle pattern and shows how to code a scanner in TradingView that detects it.
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Mastering Financial Pattern Recognition
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The Bottle Pattern
Candlestick charts are among the most famous ways to analyze the time series visually. They contain more information than a simple line chart and have more visual interpretability than bar charts.
The Bottle pattern is a two-candlestick trend following configuration. The general shape is two candlesticks of the same color with the second candlestick either lacking a high or a low (depending on the type of the pattern).
The bullish Bottle is composed of two bullish candlesticks with the second one opening at a gap lower but shaping no lower low and closing higher than the first candlestick. The following Figure shows a theoretical illustration of the bullish Bottle.
The bearish Bottle is composed of two bearish candlesticks with the second one opening at a gap higher but shaping no higher high and closing lower than the first candlestick. The following Figure shows a theoretical illustration of the bearish Bottle.
Coding the Scanner in TradingView
The conditions of the pattern are relatively easy to code especially in a straightforward and simple coding language such as Pine Script, TradingView’s native language.
The aim of the scanner is to detect the Bottle patterns using the following indications:
A green arrow for bullish Bottle signals.
A red arrow for bearish Bottle signals.
// This source code is subject to the terms of the Mozilla Public License 2.0 at https://mozilla.org/MPL/2.0/
// © Sofien-Kaabar
//@version=5
indicator("Bottle Finder", overlay = true)
bullish_bottle = close[2] > open[2] and close[1] > open[1] and open[1] < close[2] and open[1] == low[1] and close[1] > close[2]
bearish_bottle = close[2] < open[2] and close[1] < open[1] and open[1] > close[2] and open[1] == high[1] and close[1] < close[2]
plotshape(bullish_bottle, style = shape.triangleup, color = color.green, location = location.belowbar, size = size.small)
plotshape(bearish_bottle, style = shape.triangledown, color = color.red, location = location.abovebar, size = size.small)The following Figure shows a signal chart after the code has been applied and executed. Bear in mind that this pattern is quite rare.
The following Figure shows another signal chart.
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Summary
To sum up, what I am trying to do is to simply contribute to the world of objective technical analysis which is promoting more transparent techniques and strategies that need to be back-tested before being implemented. This way, technical analysis will get rid of the bad reputation of being subjective and scientifically unfounded.
I recommend you always follow the the below steps whenever you come across a trading technique or strategy:
Have a critical mindset and get rid of any emotions.
Back-test it using real life simulation and conditions.
If you find potential, try optimizing it and running a forward test.
Always include transaction costs and any slippage simulation in your tests.
Always include risk management and position sizing in your tests.
Finally, even after making sure of the above, stay careful and monitor the strategy because market dynamics may shift and make the strategy unprofitable.