Editors' picksOPEN-SOURCE SCRIPTABC on Recursive Zigzag [Trendoscope]
Updated
There are several implementations of ABC pattern in tradingview and pine script. However, we have made this indicator to provide users additional quantifiable information along with flexibility to experiment and develop their own strategy based on the patterns.
🎲 Highlights of this indicator over other ABC implementations are:
🎲 Concept of ABC Pattern
The ABC pattern, also known as the "Corrective Wave" or "Zigzag Pattern," is a fundamental concept in Elliott Wave Theory, which is widely used in technical analysis to identify and predict price movements in financial markets.
The ABC pattern is a three-wave corrective pattern that typically occurs within the context of a larger impulse or trending wave. It consists of two smaller waves in the opposite direction (A and C) separated by a corrective wave (B). These waves are labeled alphabetically and represent price movements.
Wave A (Impulse Wave): Wave A is the first leg of the ABC pattern and is characterized by a strong price move in the opposite direction of the prevailing trend. It is often driven by a fundamental or sentiment-driven event that temporarily disrupts the trend.
Wave B (Corrective Wave): Wave B is the corrective wave that follows Wave A. It represents a partial retracement of Wave A's price movement. Wave B can take various forms, such as a simple correction or a complex correction (e.g., a triangle or a flat correction). It typically doesn't retrace the entire length of Wave A.
Wave C (Impulse Wave): Wave C is the final leg of the ABC pattern and is characterized by a strong price move in the same direction as the prevailing trend. It often surpasses the starting point of Wave A and confirms the resumption of the larger trend.
🎲 Indicator Components
Upon loading the indicator on the chart, we can observe the following components on the chart.
🎲 Indicator Settings
Details of each user settings are provided in the tooltips. Below is the snapshot of it.
🎲 Alerts
Basic level of alerts are built in the script using alert function to highlight the following conditions:
Both conditions will alert simple text messages. There is not much customization provided as part of this indicator. We will consider providing more options in future versions based on the interest and demand shown by users.
🎲 Highlights of this indicator over other ABC implementations are:
- Implementation is based on recursive multi level zigzag allows bigger as well as smaller patterns to be identified
- Allows users to set their trading rules with respect to entry, target and stop ratios, experiment and build their own strategy based on the ABC pattern.
- Back test summary including win ratio and risk reward will help users understand the profitability based on different settings being used.
🎲 Concept of ABC Pattern
The ABC pattern, also known as the "Corrective Wave" or "Zigzag Pattern," is a fundamental concept in Elliott Wave Theory, which is widely used in technical analysis to identify and predict price movements in financial markets.
The ABC pattern is a three-wave corrective pattern that typically occurs within the context of a larger impulse or trending wave. It consists of two smaller waves in the opposite direction (A and C) separated by a corrective wave (B). These waves are labeled alphabetically and represent price movements.
Wave A (Impulse Wave): Wave A is the first leg of the ABC pattern and is characterized by a strong price move in the opposite direction of the prevailing trend. It is often driven by a fundamental or sentiment-driven event that temporarily disrupts the trend.
Wave B (Corrective Wave): Wave B is the corrective wave that follows Wave A. It represents a partial retracement of Wave A's price movement. Wave B can take various forms, such as a simple correction or a complex correction (e.g., a triangle or a flat correction). It typically doesn't retrace the entire length of Wave A.
Wave C (Impulse Wave): Wave C is the final leg of the ABC pattern and is characterized by a strong price move in the same direction as the prevailing trend. It often surpasses the starting point of Wave A and confirms the resumption of the larger trend.
🎲 Indicator Components
Upon loading the indicator on the chart, we can observe the following components on the chart.
- Pattern Drawings is the graphical representation of present patterns. Please note that it is not necessary for patterns to be there on the chart all the time. Patterns will appear on the chart when price makes the patterns.
- Trade Box is the box representing trade signals of the pattern. These trade levels are generated based on the user settings.
- Summary Table is the back test summary containing details of historical pattern performance including Win Ratio and Risk Reward.
🎲 Indicator Settings
Details of each user settings are provided in the tooltips. Below is the snapshot of it.
🎲 Alerts
Basic level of alerts are built in the script using alert function to highlight the following conditions:
- New ABC Pattern
- Updates to existing Pattern
Both conditions will alert simple text messages. There is not much customization provided as part of this indicator. We will consider providing more options in future versions based on the interest and demand shown by users.
Release Notes
Alerts were missed out in updates. Added them back :)Release Notes
Added more customization options to testRelease Notes
Added a condition to suppress pattern if the entry is already breached. Open-source script
In true TradingView spirit, the author of this script has published it open-source, so traders can understand and verify it. Cheers to the author! You may use it for free, but reuse of this code in publication is governed by House rules. You can favorite it to use it on a chart.
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