3-Bar Reversal
📊 WHAT IS IT?
The 3-Bar Reversal is a technical indicator that identifies specific reversal patterns formed by exactly three consecutive candles. This classic pattern signals potential changes in price direction through a clear visual structure: a trend candle, an exhaustion candle, and a reversal candle.
🎯 WHAT IS IT FOR?
This indicator helps traders to:
- Detect bullish and bearish reversals with 3-candle structure
- Filter false signals through configurable trend confirmation
- Identify support and resistance zones based on confirmed patterns
- Visualize trading opportunities with intuitive chart markers
- Trade high-probability reversals on any timeframe
🔍 HOW DOES IT WORK?
Bullish Pattern (3-Bar Bullish Reversal)
Three-candle structure:
- Candle 1 (Bearish): Close below open - confirms selling pressure
- Candle 2 (Exhaustion bearish): Makes new lows AND new highs below candle 1, with bearish close - capitulation signal ⚠️
- Candle 3 (Bullish reversal): Close above open AND high above candle 1's high - confirms control shift ✅
Bearish Pattern (3-Bar Bearish Reversal)
Opposite structure:
- Candle 1 (Bullish): Close above open - confirms buying pressure
- Candle 2 (Extension bullish): Makes new highs AND new lows above candle 1, with bullish close - overextension signal ⚠️
- Candle 3 (Bearish reversal): Close below open AND low below candle 1's low - confirms control shift ✅
Visual Management System (State Machine)
The indicator processes each pattern in three sequential phases:
PHASE 1 - PATTERN DETECTION: 🔍
- The complete 3-candle structure is identified
- A triangle indicator (▲ bullish / ▼ bearish) appears on the third candle
- A semi-transparent setup rectangle is drawn covering:
- Bullish: From candle 1's high to the lowest low (candle 2 or 3)
- Bearish: From candle 1's low to the highest high (candle 2 or 3)
- This rectangle marks the "battle zone" where the reversal occurred
PHASE 2 - CONFIRMATION OR INVALIDATION: ⏳
The system waits for the next candle after the pattern to validate it:
Bullish Confirmation: ✅
- The next candle's close must exceed candle 1's high (rectangle ceiling)
- A solid dot (●) appears marking confirmation
- The rectangle becomes an active support zone
Bearish Confirmation: ✅
- The next candle's close must break candle 1's low (rectangle floor)
- A solid dot (●) appears marking confirmation
- The rectangle becomes an active resistance zone
Invalidation: ❌
- Bullish fails if: close below rectangle minimum OR bearish pattern appears
- Bearish fails if: close above rectangle maximum OR bullish pattern appears
- The rectangle stops extending (pattern dies)
Waiting Extension: ⏸️
- If there's no confirmation or failure, the rectangle extends horizontally candle by candle
PHASE 3 - ACTIVE SUPPORT/RESISTANCE ZONE: 🎯
- Once confirmed, the zone extends indefinitely to the right
- Bullish zone: Remains active while price stays above the floor
- Bearish zone: Remains active while price stays below the ceiling
- The zone deactivates when price completely breaks it in the opposite direction
⚙️ MAIN CONFIGURATION
Pattern Mode
Controls which pattern variations are accepted:
- Normal: Only accepts when candle 3 closes INSIDE candle 1's range
- Bullish: Close < candle 1's high (moderate reversal)
- Bearish: Close > candle 1's low (moderate reversal)
- Enhanced: Only accepts when candle 3 closes OUTSIDE candle 1's range 🔥
- Bullish: Close > candle 1's high (explosive reversal)
- Bearish: Close < candle 1's low (explosive reversal)
- All (Recommended): Accepts both types without distinction ⭐
Support/Resistance Type
- Level: Basic line functionality (limited in this version)
- Zone: Draws shaded rectangles marking SR zones after confirmation 📦
- None: No SR zones, only shows detected patterns
Customizable Colors 🎨
- Bullish Reversal Color: For triangles, rectangles and bullish zones (default:
#2962FF- blue) - Bearish Reversal Color: For triangles, rectangles and bearish zones (default:
#FF9800- orange) - Bullish Trend Color: For trend filter visualization (default:
#089981- green) - Bearish Trend Color: For trend filter visualization (default:
#F23645- red)
🔧 TREND FILTERS
The indicator can filter patterns based on overall trend direction using four methods:
1. Moving Average Cloud ☁️
Uses two moving averages to identify trend:
Parameters:
- Moving Average Type: Simple, Exponential, Hull, Weighted, etc. (default: Hull)
- Fast Period: 50 (default)
- Slow Period: 200 (default)
Filter Logic (Aligned):
- Bullish trend detected when: Price > Fast MA AND Fast MA > Slow MA ✅
- Bearish trend detected when: Price < Fast MA AND Fast MA < Slow MA ✅
- Only shows bullish patterns in bullish trend and bearish patterns in bearish trend
Opposite Logic (Opposite):
- Inverts conditions to capture major counter-trend reversals
2. Supertrend 📈
Volatility-based trend following indicator (ATR):
Parameters:
- ATR Period: 10 (default) - volatility calculation window
- Multiplier Factor: 3.0 (default) - indicator sensitivity
Logic:
- Calculates upper and lower band using ATR
- Price above Supertrend = bullish trend 🟢
- Price below Supertrend = bearish trend 🔴
- Filters patterns according to configured alignment
3. Donchian Channels 📊
Uses price extremes over a period:
Parameters:
- Channel Length: 13 (default)
Logic:
- Upper channel = highest high of N periods
- Lower channel = lowest low of N periods
- Midpoint = (upper + lower) / 2
- Price above midpoint = bullish trend 🟢
- Price below midpoint = bearish trend 🔴
4. None (No Filter) 🔓
Shows ALL detected 3-bar patterns without considering overall trend. Useful for:
- Range-bound markets
- Pure pattern analysis
- Reversal trading in any context
Trend Alignment
Applies when filter is active:
- Aligned: Only shows patterns that go WITH the identified trend ➡️
- Bullish patterns only in bullish trend
- Bearish patterns only in bearish trend
- Opposite: Only shows patterns that go AGAINST the identified trend 🔄
- Bullish patterns in bearish trend (major reversal)
- Bearish patterns in bullish trend (major reversal)
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