Open Close Trend Change

11월 24일

Open Close Trend Change

This indicator identifies potential trend reversal points based on the Close-Open Gap methodology. It detects specific two-candle patterns followed by a confirmation candle that breaks a key gap level, signaling a potential trend change. The indicator also provides visual confirmation signals when follow-through occurs.

What is a Trend Change?

A Trend Change occurs when:

1. Two consecutive candles of the same color form a specific pattern
   
2. No additional pattern repetition occurs afterward
   
3. A candle in the opposite direction closes beyond the gap level
   
4. Optional: The next candle confirms the move with a wick touching the level
   

This creates a Close-Open Gap between the two setup candles that acts as a critical decision level.

Pattern Rules

Long Trend Change (Bullish Reversal)

Setup Requirements:

• Two consecutive down-close candles (close < open)
  
• Second candle must make a lower low AND lower high than the first candle
  
• No additional qualifying two-candle sequence follows immediately
  

Gap Level: Close price of the first candle

Confirmation: An up-close candle (close > open) closes above the gap level

Follow-Through Confirmation (Green Triangle):

• The candle immediately after the gap break closes above the gap level
  
• The wick (low) of this candle touches or goes below the gap level (testing support)
  

Short Trend Change (Bearish Reversal)

Setup Requirements:

• Two consecutive up-close candles (close > open)
  
• Second candle must make a higher high AND higher low than the first candle
  
• No additional qualifying two-candle sequence follows immediately
  

Gap Level: Close price of the first candle

Confirmation: A down-close candle (close < open) closes below the gap level

Follow-Through Confirmation (Red Triangle):

• The candle immediately after the gap break closes below the gap level
  
• The wick (high) of this candle touches or goes above the gap level (testing resistance)
  

Key Features

• Multi-Timeframe Support: Calculate trend changes on any timeframe while viewing on your preferred chart timeframe
  
• Customizable Lookback: Adjust how far back the indicator searches for patterns
  
• Visual Clarity: Distinct colors for bullish (green) and bearish (red) trend changes
  
• Confirmation Triangles: Visual indicators when follow-through occurs with proper level retest
  
• Selective Display: Toggle long or short signals on/off independently
  
• Extended Lines: Optional line extension to track levels into the future
  
• Smart Pattern Recognition: Automatically filters out superseded patterns when multiple setups occur in sequence
  

Parameters

SETTINGS

• Bars Lookback (default: 50): Number of bars to analyze for trend change patterns
  
• Timeframe (default: Daily): Timeframe used for pattern detection
  

VISUAL SETTINGS

• Show Long Trend Changes: Display bullish reversal signals
  
• Show Short Trend Changes: Display bearish reversal signals
  
• Long TC Color: Color for long trend change lines (default: green)
  
• Short TC Color: Color for short trend change lines (default: red)
  
• Line Width: Thickness of trend change lines
  
• Extend Lines Right: Extend lines to the right edge of the chart
  
• Show Confirmation Triangles: Display triangles when follow-through confirmation occurs
  

Understanding Confirmation Triangles

The confirmation triangles are a powerful feature that identifies high-probability setups:

Why They Matter:
When the candle after a gap break closes in the same direction AND retests the level with its wick, it demonstrates:

• Commitment: Market participants are willing to continue in the new direction
  
• Support/Resistance: The gap level is now acting as support (long) or resistance (short)
  
• Validation: The level has been successfully flipped
  

Visual Indicators:

• Green Triangle (pointing up): Appears below bullish follow-through candles
  
• Red Triangle (pointing down): Appears above bearish follow-through candles
  
• Triangles only appear when both close and wick conditions are met
  

Trading Application

The Close-Open Gap acts as a decision level where price previously showed commitment to a direction. When this gap is broken by a candle closing on the opposite side, it suggests:

• Previous directional momentum has weakened
  
• Market participants are willing to push through the gap
  
• A potential shift in short-term trend direction
  
• When confirmed with a triangle: Higher probability of continuation
  

Example Use Cases

Long Trend Change:

• Wait for two down-close candles forming lower lows (red line appears)
  
• Enter long when up-close candle breaks above the gap
  
• Stronger signal: Green triangle appears when next candle retests and closes above
  
• Use gap level as initial stop-loss reference
  
• Consider tighter stops when confirmation triangle is present
  

Short Trend Change:

• Wait for two up-close candles forming higher highs (red line appears)
  
• Enter short when down-close candle breaks below the gap
  
• Stronger signal: Red triangle appears when next candle retests and closes below
  
• Use gap level as initial stop-loss reference
  
• Consider tighter stops when confirmation triangle is present
  

Pattern Recognition Logic

Rolling Window Approach:
When three or more consecutive same-colored candles occur, the indicator uses only the last two qualifying candles as the setup. This ensures:

• Only the most recent pattern is considered
  
• Earlier setups in a continuous sequence are automatically superseded
  
• Reduced chart clutter from redundant signals
  

Example: If you see 4 consecutive down-close candles where each makes lower lows and lower highs, only the gap between the last two will be marked.

Important Notes

• Lines without triangles indicate basic trend change setups
  
• Lines with triangles indicate confirmed setups with follow-through
  
• Confirmation triangles appear only when specific wick and close conditions are met
  
• Not all gap breaks will generate confirmation triangles
  
• Trend changes indicate potential reversals but are not guaranteed
  
• Always combine with other technical analysis tools and proper risk management
  
• Consider overall market context and trend direction
  
• Works best when aligned with higher timeframe trend structure
  

How It Works

The indicator continuously monitors the selected timeframe for valid two-candle patterns. The process:

1. Scans for two consecutive same-colored candles meeting specific criteria
   
2. Filters out patterns that are immediately followed by another qualifying setup
   
3. Draws a horizontal line at the gap level (close of first candle)
   
4. Monitors for a candle closing beyond the gap in the opposite direction
   
5. Checks the following candle for confirmation (close + wick retest)
   
6. Displays a triangle when full confirmation occurs
   

Best Practices

• Use confirmation triangles as higher-confidence entry signals
  
• Combine with volume analysis for additional confirmation
  
• Consider multiple timeframes: gaps on higher timeframes often more significant
  
• Watch for confluence with other support/resistance levels
  
• Gaps that align with round numbers or key levels tend to be more reliable
  
• Monitor how price behaves after the confirmation triangle appears
  

Disclaimer

This indicator is a pattern recognition tool for educational purposes. It does not predict future price movements and should be used as part of a comprehensive trading strategy with proper risk management. Past performance does not guarantee future results. Confirmation signals improve probability but do not eliminate risk.

11월 24일

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