Pattern Alert v1.1 Indicator for MT4

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Pattern Alert v1.1 Indicator for MT4

Introduction to the Pattern Alert v1.1 Indicator

Candlestick patterns are often used by price action traders as a means to open trades. However, not all traders have the skill to identify such candlestick patterns correctly or objectively.

The Pattern Alert v1.1 indicator is a tool that new traders can use to help them objectively identify possible reversal candlestick patterns.

What is the Pattern Alert v1.1 Indicator?

The Pattern Alert v1.1 indicator is a custom technical indicator which provides trade signals based on candlestick patterns. It identifies common candlestick patterns and labels it on the price chart. It also plots a small arrow pointing the direction of the reversal signal along with the label.

Pattern Alert v1.1 Indicator for MT4

How the Pattern Alert v1.1 Indicator Works?

Different candlestick patterns have different characteristic descriptions. For example, the Bullish Engulfing pattern is characterized as a candlestick in which the body of the current candle is larger than that of the preceding candle. This description can be identified and programmed algorithmically as a candle that has a close price higher than the open price of the prior candle. The Pattern Alert v1.1 indicator would automatically identify and label this pattern based on its underlying algorithm. The same concept of converting the characteristic description into an algorithm is done for all the other patterns included allowing the indicator to automatically identify patterns.

How to use the Pattern Alert v1.1 Indicator for MT4

The Pattern Alert v1.1 indicator allows traders to modify which type of candlestick patterns would be identified and labeled on the price chart. These modifications can be done within the indicator settings.

How the Pattern Alert v1.1 Indicator Works

The candlestick patterns identified by the Pattern Alert v1.1 indicator can be used as an entry signal or a basis for a trade setup. However, although descriptively valid not all patterns identified would characteristically look like the standard patterns. As such, it is best that traders would still visually confirm if the pattern being traded does look like a valid reversal pattern.

It is also best to use these patterns as signals and should be in confluence with other technical indications such as trend direction or a reversal from a support or resistance level.

Buy Trade Setup

When to Enter?

Observe a bullish trade setup. Open a buy order as soon as the Pattern Alert v1.1 indicator identifies a bullish candlestick pattern. Set the stop loss below the pattern.

When to Exit?

Close the trade as soon as price action shows signs of reversal.

How to use the Pattern Alert v1.1 Indicator for MT4 - Buy Trade

Sell Trade Setup

When to Enter?

Observe a bearish trade setup. Open a sell order as soon as the Pattern Alert v1.1 indicator identifies a bearish candlestick pattern. Set the stop loss above the pattern.

When to Exit?

Close the trade as soon as price action shows signs of reversal.

How to use the Pattern Alert v1.1 Indicator for MT4 - Sell Trade

Conclusion

Candlestick patterns can be effective trade entry signals as long as it is in confluence with a bigger picture trade setup or trend direction. The Pattern Alert v1.1 indicator can be a very useful tool for identifying such candlestick patterns and trade entries.

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