BitcoinEducation
HOW-TO: Automatic Pattern Detection in TradingView
Chart patterns are a part of the foundation of technical analysis and are one of the most popular methodologies used by traders to predict future price variations.
Chart patterns are governed by precise identification guidelines and it is important to effectively recognize the presence of a specific pattern. Since this recognition process can be subjective, we designed a robust and efficient algorithm for the detection of traditional chart patterns, saving users valuable time.
In this post, we describe how to effectively use the Automatic Pattern Detection inside our main toolkit, Lux Algo Premium.
Using The Pattern Detection Feature
The Automatic Pattern Detection can be enabled within the Lux Algo Premium toolkit directly from SR Mode.
When enabled, a new cell on the dashboard will appear showing the current detected pattern. When no patterns are detected the dashboard will indicate the absence of a pattern and dashed lines will be displayed that can be used as support and resistance.
The Pattern Detection feature at the time of this publication can detect the most commonly traded chart patterns, including:
Note that the Pattern Detection algorithm depends on the current SR significance selected. Higher SR significance aims to return longer-term pattern structures.
Examples
Below are some examples of detected chart patterns using the Automatic Pattern Detection.
Rising Wedge
Falling Wedge
Ascending Triangle
Descending Triangle
Symmetrical Triangle
Head & Shoulders
Inverted Head & Shoulders
Double Top
Double Bottom
Tips
Once you have noticed a promising detected pattern, it is important to look at various other factors to gain confidence on its validity, as well as having a good plan in order to trade it.
You can see if an ongoing pattern requires your attention by looking at indicators or possible patterns on lower/higher timeframes and checking if this information lines up with the ongoing pattern as well.
Certain patterns require certain volume trends in order to asses their validity. Some require down-trending volume, others require up-trending volume, and some require significant volume during a breakout.
It is possible to set take profits and stop losses when trading chart patterns using measure rules. Measure rules have been described by Bulkowski for several patterns.
We have an ongoing series about classical and more exotic patterns that you can read in order to understand them at a deeper level with education on identification rules, measure rule, and causes:
Chart patterns are governed by precise identification guidelines and it is important to effectively recognize the presence of a specific pattern. Since this recognition process can be subjective, we designed a robust and efficient algorithm for the detection of traditional chart patterns, saving users valuable time.
In this post, we describe how to effectively use the Automatic Pattern Detection inside our main toolkit, Lux Algo Premium.
Using The Pattern Detection Feature
The Automatic Pattern Detection can be enabled within the Lux Algo Premium toolkit directly from SR Mode.
When enabled, a new cell on the dashboard will appear showing the current detected pattern. When no patterns are detected the dashboard will indicate the absence of a pattern and dashed lines will be displayed that can be used as support and resistance.
The Pattern Detection feature at the time of this publication can detect the most commonly traded chart patterns, including:
- Rising/Falling Wedges
- Ascending/Descending/Symmetrical Triangles
- Head And Shoulders
- Inverse Head And Shoulders
- Double Tops/Bottom
Note that the Pattern Detection algorithm depends on the current SR significance selected. Higher SR significance aims to return longer-term pattern structures.
Examples
Below are some examples of detected chart patterns using the Automatic Pattern Detection.
Rising Wedge
Falling Wedge
Ascending Triangle
Descending Triangle
Symmetrical Triangle
Head & Shoulders
Inverted Head & Shoulders
Double Top
Double Bottom
Tips
Once you have noticed a promising detected pattern, it is important to look at various other factors to gain confidence on its validity, as well as having a good plan in order to trade it.
You can see if an ongoing pattern requires your attention by looking at indicators or possible patterns on lower/higher timeframes and checking if this information lines up with the ongoing pattern as well.
Certain patterns require certain volume trends in order to asses their validity. Some require down-trending volume, others require up-trending volume, and some require significant volume during a breakout.
It is possible to set take profits and stop losses when trading chart patterns using measure rules. Measure rules have been described by Bulkowski for several patterns.
We have an ongoing series about classical and more exotic patterns that you can read in order to understand them at a deeper level with education on identification rules, measure rule, and causes:
Get access to our exclusive tools: luxalgo.com
Join our 150k+ community: discord.gg/lux
All content provided by LuxAlgo is for informational & educational purposes only. Past performance does not guarantee future results.
Join our 150k+ community: discord.gg/lux
All content provided by LuxAlgo is for informational & educational purposes only. Past performance does not guarantee future results.
Related publications
Disclaimer
The information and publications are not meant to be, and do not constitute, financial, investment, trading, or other types of advice or recommendations supplied or endorsed by TradingView. Read more in the Terms of Use.