The Split Pattern Recognition in TradingView
Coding a Split 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 Split pattern and shows how to code a scanner in TradingView that detects it.
For the complete collection of candlestick patterns in detail with back-tests and technical strategies, you can check out my newest book with O’Reilly Media. The book features a huge number of classic and modern candlestick patterns as it dwelves into the realm of technical analysis with different trading strategies. The book comes with its own GitHub and is dynamic in nature as it is continuously updated and questions are answered on the O’Reilly platform promptly.
Mastering Financial Pattern Recognition
Amazon.com: Mastering Financial Pattern Recognition eBook : Kaabar, Sofien: Kindle Storeamzn.to
The Split 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 Split pattern is a two-candle configuration with different characteristics.
The bullish Split is composed of a bearish candlestick with a low equal to the close (representing strong bearish momentum) followed by a bullish candlestick with a high equal to the close (representing the reversal of the momentum). Furthermore, the close of the second candlestick must be greater than the open of the first candlestick. The following Figure shows a theoretical illustration of the bullish Split.
The bearish Split is composed of a bullish candlestick with a high equal to the close (representing strong bullish momentum) followed by a bearish candlestick with a low equal to the close (representing the reversal of the momentum). Furthermore, the close of the second candlestick must be lower than the open of the first candlestick. The following Figure shows a theoretical illustration of the bearish Split.
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 Split patterns using the following indications:
A green arrow for bullish Split signals.
A red arrow for bearish Split signals.
The following Figure shows a signal chart after the code has been applied and executed. Bear in mind that this pattern is quite rare.
// 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 - Split", overlay = true) bullish_split = close < open and open < high and close == low and close > open and close == high and open > low and close > open bearish_split = close > open and open > low and close == high and close < open and close == low and open < high and close < open plotshape(bullish_split, style = shape.triangleup, color = color.green, location = location.belowbar, size = size.small) plotshape(bearish_split, style = shape.triangledown, color = color.red, location = location.abovebar, size = size.small)
The following Figure shows another signal chart.
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.