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:

1. Candle 1 (Bearish): Close below open - confirms selling pressure
2. Candle 2 (Exhaustion bearish): Makes new lows AND new highs below candle 1, with bearish close - capitulation signal ⚠️
3. 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:

1. Candle 1 (Bullish): Close above open - confirms buying pressure
2. Candle 2 (Extension bullish): Makes new highs AND new lows above candle 1, with bullish close - overextension signal ⚠️
3. 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)