0dQmTf6K71U

all right welcome back traders this is
matt from zen and the art of trading
today's video i'm gonna be covering how
to detect basic candlestick patterns in
pine scripts so this lesson is going to
build off the previous lesson lesson 5
and in lesson 4 and 5 I showed you how
to detect RSI conditions indicator
conditions using the inbuilt
pine script function and we're just
going to adjust the script here so that
alerts are only triggered when the RSI
is overbought and oversold and we get a
engulfing candle like this here and this
up here we've got a bullish engulfing
candle here and a bearish engulfing
candle here after the RSI is gone
overbought and oversold so I'm going to
show you guys how to detect that
condition using pine scripts and let's
get into it I'm gonna break this up into
three lines of code to make this easier
to understand so the first thing we're
doing here is we're gonna identify
engulfing candles so the first one we're
going to detect is a bullish engulfing
candle and in order to detect a valid
engulfing candle we need to find a
candle that closes higher than the
previous candle opened it's it can be
different for stocks and things like
that where there's gaps in price action
but for this lesson we're gonna keep it
simple we're just gonna focus on this
catalyst Forex pair this gold versus US
dollar where there are no gaps in price
action and so what we need to detect is
whether this current closing price of
the current candle is greater than or
equal to the previous opening price so
using this as an example we want to
check if this closing price is greater
than or equal to this opening price and
the way you would reference this
previous bar is by using what's called
an array so this array will reference
depending what number you put in here
say 1 2 3 4 100 whatever you put in here
will reference the number in previous
bars from the current candle so let's
just assume that this right here is our
current candle we want to
detect whether the closing price is
greater than the candle before it so
we're looking one candle back so we put
in a 1 in here but this is also going to
detect if we just leave this as it is
it's also going to detect hi-hi-hi
closets because this candle here closed
higher than the previous open as well so
we need to filter this signal and make
sure that the previous candle closed
bearish and all that means is that the
closing price is lower than the opening
price so in order to do that we combine
these two boolean values so we want to
find out did the candle close higher
than or equal to the previous open and
did the previous candle close lower than
its opening price that's it that's all
we need in order to detect this pattern
here very simple so the next one is a
bearish engulfing candle and it's
basically just the opposite of all of
this so we're looking for a candle that
closed less than or equal to the
previous open and the previous candle
must have closed bullish so in this case
the previous closing price must be
greater than the previous open price and
now that's all we need in order to
detect bullish and bearish engulfing
candles and then to create a trading
signal out of this we're going to create
a new boolean value called trade signal
and trade signal is going to be assigned
to we're going to combine these two
variables these two boolean values with
these two boolean values so the way
we're going to do that is we're going to
use as we're going to open two
parentheses so we're gonna have one open
bracket and then another open bracket so
if you remember algebra from school
whatever is in this bracket here this X
is going to be executed before
whatever's in the outer brackets so this
will be execute X will be executed
before Y the reason we need this is that
we're going to check whether the RSI was
overbought on the current candle or the
previous candle so see in this example
here there is no RSI signal below the
candle that's because when this candle
closed
the RSI indicator went from oversold to
not oversold but the previous candle was
oversold so we want to detect this
candlestick pattern if the RSI was
oversold on this candle or the previous
candle so the way we would do that in
Pine script is we would say is RSI
oversold or is the RSI oversold on the
previous candle so the same way we can
reference previous open/close high-low
prices using this array functionality we
can do the same with our own custom
boolean x' so this in a bracket here
will be true only if the current candle
is oversold or the candle before it is
oversold and then we want to combine
that with our bullish engulfing candle
detection so we'll just type in here
bullish you see so now this will turn
true this trade signal boolean will turn
true if the current RSI is oversold or
it was oversold on the previous candle
and we got a bullish engulfing candle
signal we want to do the same for
bearish so this trade signal is going to
detect both bullish and bearish signals
and so after this outer bracket that
encompasses all of this boolean
calculation we want to add the or
operator and do the same thing for the
bearish detection so to open brackets
and then is the RSI overbought or was it
over bought on the previous candle and
do we have a bearish engulfing candle
detected closed bracket so now this line
of code will turn true if we detect a
bullish or bearish engulfing candle
while that while the RSI is overbought
or oversold now if we save this script
nothing's going to change here because
we haven't changed our plot shape and
our alert functionality so what we'll do
here is we'll say plot the overbought
signal the cell signal only if we get a
trade signal and that trade signal is a
bearish engulfing candle we'll do the
same for the next plot shape we're going
to say here plot a buy signal only
if we got a trade signal and it was a
bullish engulfing candle we'll do the
same down here he cept here because we
want these alerts to be triggered for
both bullish and bearish engulfing
candle signals we only need to put in
trade signal here we don't need to
specify what type of trade see you
that's only for plotting the signal to
the chart so now if I hit save we're
going to eliminate all of these signals
here and we'll only detect this one and
this one up here so let's hit save and
watch the magic happen there we go we
get only two signals on this chart now
and we have our bullish buy signal when
the RSI goes oversold and we get a
bullish engulfing candle and then the
same is true of a sell signal
it only plots when the RSI goes
overbought and we get a bearish
engulfing candle and the same is true of
our alerts we'll only get an alert to
our phone and charting platform if these
market conditions are met and so that's
the beginnings of using plan script to
create your own strategy scripts or to
detect your own setups in the markets so
once you get proficient at using pine
script you can use these these
functionality and what I've been
teaching you to detect your own trading
setups in the markets and send alerts to
your phone or email account whenever
your trading setup appears in the
markets this helps you to stay on top of
the markets without having to check the
charts especially if you trade the
15-minute chart or the five-minute chart
this can help you stay on top of
multiple markets depending on your
trading view subscription type you can
set as many alerts as you want I'm on
the Pro I'm on the Pro Plus subscription
so I can set as many alerts as I want
and I could set an alert for every
currency pair that I'm trading and then
I don't have to scroll through my charts
all the time to detect these setups this
script will detect it for me and send me
an alert so that's it for this lesson I
hope you found it helpful and in the
next lesson I'm not sure what I will be
covering but it'll be something more
advanced than this so these lessons are
going to build on top of each other and
become more and more advanced so
if you haven't seen the other lessons go
back and watch them if you need a pine
script otherwise hang in there more
content is coming I appreciate your
support please hit the like button and
the subscribe button if you want to be
alerted whenever I come out with a new
pine script lesson and I'll see you in
the next one have a great week guys good
luck with your trading good luck with
your coding I'll speak to you soon take
it easy
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