Description
The ThreeBarInsideBarLE strategy generates a Long Entry signal when a positive Three-Bar Inside Bar pattern occurs.
If an inside bar formed inside two higher closes, then it is considered to be a three-bar inside bar positive reversal. The positive Three-Bar Inside Bar pattern is recognized if:
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The first bar's Close price is lower than that of the second bar;
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The third bar's High price is less than that of the previous bar;
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The third bar's Low price is greater than that of the previous bar;
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The fourth bar's Close price is higher than that of the previous bar;
In the event of the positive Three-Bar Inside Bar pattern, this strategy generates the Long Entry signal for the next bar. Note that this strategy can only be used to initiate a position and not to extend an existing one. It can be accompanied with ThreeBarInsideBarSE for short entries (with ProfitTargetSX and StopLossSX for short exits), ProfitTargetLX and StopLossLX for long exits.
Note that, by default, this strategy can only be used to open a new position but not to close the existing one.
Further Reading
1. "Three-Bar Inside Bar Pattern" by Johnan Prathap. Technical Analysis of Stocks & Commodities, March 2011.
Backtesting is the evaluation of a particular trading strategy using historical data. Results presented are hypothetical, and there is no guarantee that the same strategy implemented today would produce similar results.
Technical analysis is not recommended as a sole means of investment research.
For educational purposes only. Not a recommendation of a specific security or investment strategy.