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The Counterattack Pattern Recognition in TradingView
Coding a Counterattack 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 Counterattack pattern and shows how to code a scanner in TradingView that detects it.
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The Counterattack 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 Counterattack pattern is a reversal pattern that occurs when the gap is immediately sealed by the price action. It is a rare pattern as the close price must theoretically be the same as the previous close price after the gap.
The bullish Counterattack is composed of a bullish candlestick that gaps down a previous bearish candlestick with the close prices being equal. The following Figure shows a theoretical illustration of the bullish Counterattack.
The bearish Counterattack is composed of a bearish candlestick that gaps up a previous bullish candlestick with the close prices being equal. The following Figure shows a theoretical illustration of the bearish Counterattack.
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.
Note that this pattern is also referred to as the On Neck pattern (or at the very worst case, it is extremely similar to it.
The aim of the scanner is to detect the Counterattack patterns using the following indications:
A green arrow for the Counterattack signals.
A red arrow for the Counterattack 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("Candlestick Pattern - Counterattack", overlay = true) bullish_counterattack = open < close and close > open and close < open and close == close bearish_counterattack = open > close and close < open and close > open and close == close plotshape(bullish_counterattack, style = shape.triangleup, color = color.green, location = location.belowbar, size = size.small) plotshape(bearish_counterattack, 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.
The following Figure shows another signal chart.
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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.