FU Candle Indicator V3.2

12월 4일

What the FU Candle Indicator does:
First we need to understand what FU candles are. There's bullish and bearish FU candles.

Bullish FU candles are candles that have a long wick that takes out the previous candles low, then turns around and closes above the high of the previous candle.


Bearish FU candles are candles that have a long wick that takes out the previous candles high, then turns around and closes below the low of the previous candle.


Then there's so called attempted FU candles (ATT FU)
The difference between normal FU candles and ATT FU candles is, that the ATT FU candle doesn't close above/below the high/low of the previous candle but only above the previous candle's body close.

Bullish ATT FU Candle:


Bearish ATT FU Candle:


Detection of Bullish FU Candles:
Bullish FU Candles are detected by measuring the distance between the low of the previous candle and the low of the current candle.
Then the distance between the previous candles high and the current candles close price are measured.
If current candle low < previous candle low and current candle close > previous candle high = Bullish FU Candle.

Detection of Bullish ATT FU Candles:
Bullish ATT FU Candles are detected by measuring the distance between the low of the previous candle and the low of the current candle.
Then the distance between the previous candles close or open price and the current candles close price are measured. If the previous candle closed bearish, the open price is used for comparison, if the previous candle closed bullish, the close price is used for comparison.
If current candle low < previous candle low and current candle close > previous candle open or close = Bullish ATT FU Candle.

Detection of Bearish FU Candles:
Bearish FU Candles are detected by measuring the distance between the high of the previous candle and the high of the current candle.
Then the distance between the previous candles low, AND the current candles close price are measured.
If current candle high > previous candle high, AND current candle close < previous candle low = Bearish FU Candle.

Detection of Bearish ATT FU Candles:
Bearish ATT FU Candles are detected by measuring the distance between the high of the previous candle and the high of the current candle.
Then the distance between the previous candles close or open price and the current candles close price are measured. If the previous candle closed bearish, the open price is used for comparison, if the previous candle closed bullish, the close price is used for comparison.
If current candle high > previous candle high and current candle close < previous candle open or close = Bearish ATT FU Candle.

What makes this script unique?

• It shows and liquidity grab and a break of structure on a lower timeframe in one candle.
  
• It allows to adjust the settings for the asset and timeframe you're using
  
• The built in filters (Fractal Filter and EMA Filter) are both optional but allow to filter out certain candles and most importantly it leaves room for experimentation and optimisation to your trading style.
  

Input Settings and how to use them:

• Bullish FU Candle Color --> This setting is to set the color for bullish FU candles.
  
  
• Bearish FU Candle Color --> This setting is to set the color for bearish FU candles.
  
  
• Chart --> This setting enables you to display FU's on different timeframes instead of only the current time. It's set to current timeframe by default.
  
  
• Liq. Grab in Points --> This is the strength of the liquidity grab. By how many points has the current candle taken out the low/ high of the previous candle. It's set to 20 by default but it has to be adjusted to the timeframe and asset you're using.
  
  
• Engulfing in Points --> This the strength of the engulfing of the previous candle. It measures the distance of the current close price to the open, close, high or low of the previous candle. It depends if the current candle is bullish or bearish and if the previous candle was bullish or bearish and if ATT FUs are enabled but this setting applies to all methods. It's set to 20 by default but you have to adjust it to the asset and timeframe you're using.
  
  
• Min. Size in Points --> This setting is to filter out tiny candles. It measures the overall size of the FU candle from low to high. It's set to 20 by default but you have to adjust it to the asset and timeframe you are using.
  
  
• Min. Body Size in Points --> This setting is to filter out FU candles that have a tiny body. It measures the size of the body from open to close. It's set to 20 by default but you have to adjust it to the asset and timeframe you are using.
  
  
• Max. Body Size in Points --> This setting is to filter out FU candles that have a huge body. It measures the size of the body from open to close. It's set to 10000 by default but you have to adjust it to the asset and timeframe you are using.
  
  
• Show ATT FU Candles --> ATT FU Candles are FU's where the body only engulfs the previous candles body but not the wick. This type of FU candles is just as valid as the strong FU's where the Body and the wick of the previous Candle is engulfed. The setting is enabled by default.
  
  
• Rejection Filter --> This setting is used filter out FU candles where the opposite side rejection is stronger than the body direction of the FU. This filters out a lot of traps. It's disabled by default.
  
  
• Fractal Filter --> FU's are only valid if they broke a fractal of the past x candles. This filters out some of the FU candles that are inside a range and therefore invalid. This is an optional filter and disabled by default.
  
  
• EMA Filter --> FU's are only if they are above/ below the EMA. This is to filter out most of the FU candles that are inside ranges. The EMA period can be set too. This is an optional filter and enabled and EMA length set to 7 by default. You can enable it and/ or change the length of the EMA to fit your trading style.
  
  
• Show Entry Lines --> The entry line setting has been changed in terms of styling. The upper and lower line has been removed. Now only the 50% retracement line of the candle body is displayed and the line type, color, strength and length can be set to keep charts as clean as possible.
  
  
• Alert Timeframes --> You can select the timeframes for which you want to receive an alert if you set and alert for the FU Candle indicator. If you set an alert for the FU Candle Indicator it will send an alert for every FU candle on every selected timeframe.
  
  
• TF1-TF8 --> This setting is to enable or disable alerts for timeframe 1 - timeframe 8. By default all alerts are disabled, I recommend only enabling the ones that you actually use.
  

Recommended use:
A bullish FU candle doesn't necessarily mean it's a long and vice versa a bearish FU candle doesn't necessarily mean it's a short. In fact, most FU candles are traps. Often times you'll see a bullish FU candle starting a bearish reversal.
Whenever you see an FU Candle check the following:

• Did the FU candle take relevant liquidity?
  
• Is the FU Candle in line with the overall bias or does it go against the bias?
  
• Where did the FU react? Example: A bearish FU candle that reacts in a bullish FVG is a perfect long entry and vice versa.
  
• A bullish FU candle that takes out a relevant swing high can often be a fake-out and price can immediately reverse as the next candle opens.
  
• Timing is also very important. Usually the valid FU candles happen after a strong move to one direction during high volume times and right before or right after a new candle opens on a higher timeframe.
  

Examples of valid setups:

Nr. 1) Mitigation Setup
Overall bullish on the higher time frame, liquidity grab to the downside, shift in momentum, strong move to the upside left a FVG. later price comes back into the FVG and forms a FU candle --> perfect long trade targeting the opposite side of the range.
Entry either at close of the FU or at the 50% retracement.

Nr. 2) Trap Setup
Clear bullish trend respecting the trend line, bearish FU candle forms but it didn't take any relevant liquidity to the upside. Only internal range liquidity. Perfect long entry using a buy limit below the lower wick of the FU candle with the SL below the nearest low.


Nr. 3) Liquidity Grab Setup
Bearish trend, price comes up aggressively and takes out a high and forms an FU Candle. Market entry short at close of the FU candle or at the 50% retracement of the FU candle or by putting a limit order right above the wick of the candle that follows the FU candle, targeting the opposite side of the range.


Nr. 4) Fake Breakout Setup
Price takes out a significant HTF low, then makes at least 2 BOS on the LTF and forms an Order Block or leaves an FVG. Price forms a bearish U that fails to close below the FVG or Orderblock.
Market entry long at the close of the bearish FU targeting the opposite side of the range. Vice versa for shorts. In simple terms: Bullish FUs at the top of the range and bearish FUs at the bottom of the range are usually always traps.
Sometimes price takes out the high/low of a trap FU before reversing aggressively so you can also have a limit order below the low of the bearish FU or above the high of a bullish FU in this case. But you risk missing the trade.


Entry Methods:

Entry Type 1) Market Entry at the close of the FU candle. --> Never miss a trade, not the best RRR.


Entry Type 2 Limit Entry at the 50% retracement of the body of the FU candle. --> Miss some of the trades but better RRR.


Entry Type 3 Limit order below the wick of the candle that follows the FU candle. --> Miss quite a lot of trades but by far best RRR.


Why this is a closed source script:
The source code of this script is not open because I have spent several years of my life developing it and I use it in all my trading bots.
Also I'm open for feedback and will modify/ update the script for free if I get input that can make it better.

For questions, please reach out via DM or check out my youtube channel. I have several videos explaining in detail how I use these candles, which are valid and which aren't.