Pipe Bottoms Indicator Based on Thomas Bulkowski's TheoriesPipe bottom is a great indicator of short-term bullish reversal trading. Pipe bottoms appear as 2 "spikes" on the chart after a 2 weeks price drop downtrend, which look like 2 parallel lines on the chart. Based on Bulkowski and the definition on his Patternsite, those 2 "spikes" candles can be any shape, whether doji or any other kinds, thus, wicks length or candle bodies are NOT required in this type of trends. However, a wide price range for these 2 spikes compared to other candles that appeared in 2 weeks is required, so I made sure these 2 pipe bottoms have true ranges (candle length) bigger than the average true ranges in the past 10 trading days (14 calendar days).
Then, a large price overlap must be between these 2 pipe bottoms, so I made sure that the high of either candle of the 2 pipe bottoms must be bigger than 40% of the true range added from the low of another candle, which in short, means that the high of the lower candle will at least be around the middle of the higher candle, and that will ensure price overlap. You can make this 50%, 60% or even 70% of the true range to ensure even greater price overlap, but you will find out that the signal amounts will decrease quite a lot after adjusting.
Bulkowski also suggested 1% variation of the bottom price (low) of those 2 candles, I put it 5% (0.05) personally to get more signals since I do not solely rely on this indicator, and I want more pipe bottoms to show up on my chart for screening purposes. So, feel free to adjust that number for the identification of this pattern.
Finally, the way I ensure it has been a downtrend or price drop is by checking if the price today is below the average of the last 10 trading days (14 calendar days), the price of the pipe bottoms must be below the moving averages of the past 10 trading days. I use hl2 here, feel free to change it to close or open as fit your strategy. Also, you can do this by making sure the candle close prices are decreasing in the past 10 trading days, or any other ways to ensure it's been in a downtrend, but for me, this works fine since again, this is just one of the many patterns I use, so I want more indicators to show up.
So, as you can see on the chart. Whenever the pattern fits the indicator, a small white cross will show up under the candle with "Pipe" text next to it. But do NOT rush to buy yet, because in order to satisfy the pipe bottom pattern, the current close price must be higher than the high of the pipe bottom. And you will see green arrowups when a pipe bottom occurred the last candle, and the current close price is above the high of the pipe bottoms, that would be the entry point of this indicator.
Overall it's a good pattern, especially for a trading bullish reversal after a huge price drop. You can adjust many numbers as I mentioned above to fit your needs, but make sure to add this with other indicators for your strategy, using only 1 indicator or pattern along is never a wise thing, especially in trading. Thanks guys, please like and share.
Thomasbulkowski
NR7 Indicator Based on Thomas Bulkowski's TheoriesThis NR7 indicator was built on the concept by Thomas Bulkowski and his ThePatternSite. NR7 is based on high to low price range (true range) that is the smallest of the prior 6 days (7 days total), when one NR7 shows, it means that today's candle body (low to high) is the narrowest of the past 7 days. Then if the current close is higher than the NR7's high, we call it a bullish breakout; and if the current close is lower than the NR7's low, we call it a bearish breakout. Regardless the direction, once the current close price goes above or below the high or low of the NR7 candle, we call it a "breakout" in this strategy. Bulkowski suggested on his website that only gave 7 calendar days (NOT trading days) for the symbol to breakout after NR7 occurs, and if the underlying asset does not breakout within 7 calendar days after one NR7 occurs, we would abandon this NR7 signal and start recounting again.
Since most securities/indexes do not trade on the weekends and have no data available, I switched 7 calendar days breakout limit to 5 trading days breakout limit, which will work on most assets. However, if you are trading cryptocurrencies or forex which have data on the weekends, feel free to add 2 more days to finish the NR7 count, all you have to do is to add "Buy6", "Buy7", "Sell6" and "Sell7" under line 11 and line 17, then add the senarioes under those "if" statements.
Every "NR7" will show up on the chart with a cross symbol and text next to it, then green arrowups show bullish signals and red arrowdowns show bearish signals. Bulkowski also added a "CPI" index on his NR7 strategy, this indicator does not include that "CPI equation" for simplicity purposes and other time frame tradings other than just weekly signals. Please like and share this script, let me know if any questions, thanks!
