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Enhanced Candlestick Patterns v3 (Indie v5)

Overview

This indicator detects 10 major reversal candlestick patterns using price action, trend filters, volume confirmation, and volatility-based constraints. It is designed for price action traders, strategy developers, and learners transitioning from PineScript to Indie v5. The logic adheres closely to canonical definitions of each pattern, with built-in flexibility via parameters for tuning to market conditions. The script is optimized for educational clarity and modularity, making it a valuable reference for those studying the Indie language.

Patterns Detected

Bullish Patterns:
- Bullish Engulfing
- Morning Star
- Hammer
- Piercing Line
- Three White Soldiers
Bearish Patterns:
- Bearish Engulfing
- Evening Star
- Shooting Star
- Dark Cloud Cover
- Three Black Crows

Each is shown on the chart using @plot.marker decorators with meaningful colors and labels.

Strategy & Algorithmic Approach

Trend Detection

A trend filter is applied using a dual EMA comparison:

fast_ema = Ema.new(self.close, fast_ema_len)
slow_ema = Ema.new(self.close, slow_ema_len)

in_uptrend = fast_ema[0] > slow_ema[0]
in_downtrend = fast_ema[0] < slow_ema[0]

This ensures that reversal patterns are only considered in appropriate market phases.

ATR-Based Volatility Normalization

All pattern logic uses ATR as a proxy for current volatility:

atr14 = Atr.new(14)

Pattern features (body size, gap size, shadows) are compared as ratios to atr14[0] to avoid false positives during low-volatility conditions.

Volume Confirmation

Engulfing patterns require a volume increase for validation:

ctx.volume[0] > ctx.volume[1] * volume_ratio

This helps reduce noise in ranging markets.

Example: Morning Star Logic (Simplified)

Conditions:

Bearish first candle (large body)
Small-bodied second candle (indecision)
Bullish third candle that closes above midpoint of first
At least one ATR-based gap present

gap_down = min(open1, close1) - max(open2, close2) > gap_atr_ratio * atr
gap_up = min(open3, close3) - max(open2, close2) > gap_atr_ratio * atr

closes_above_midpoint = close3 > (open1 + close1) / 2

All conditions must be satisfied for a Morning Star marker to appear.

Parameters

The script includes configurable parameters for fine-tuning:

Parameter	Description	Default
`doji_ratio`	Max body-to-range ratio for Doji	0.05
`shadow_body_ratio`	Min shadow-to-body ratio for Hammer/Shooting Star	2.0
`minimum_body_atr`	Min body size as a % of ATR	0.3
`gap_atr_ratio`	Min gap size (ATR-normalized) for stars	0.1
`volume_ratio`	Min volume multiplier for engulfing patterns	1.2
`fast_ema`	EMA for short-term trend filtering	20
`slow_ema`	EMA for long-term trend filtering	50

All are exposed via @param.* decorators and can be adjusted from the indicator settings panel.

Educational Notes for Indie Learners

The indicator follows the Main(self) entry pattern required in Indie v5.
Uses Indie-native series objects (Ema.new(), Atr.new()) instead of manual loops.
Pattern logic is cleanly separated into modular Python-style functions.
The use of Series[float] and indexing (ctx.close[1]) will feel familiar to PineScript users, but Indie provides explicit type safety and structuring.
Indie does not allow Python-style chained comparisons (x < y < z). Instead, use x < y and y < z.

Visual Output

All patterns are rendered via @plot.marker() using LABEL style.
Marker positions (above/below) are chosen based on bullish/bearish context.
Each pattern uses a unique color for quick visual distinction.

Performance Considerations

The pattern logic is strictly single-pass (self[...] used directly).
No loops or recursive constructs are used, ensuring fast real-time updates.
Avoids excessive historical back-referencing to maintain forward-testing compatibility.

Use Case

Suitable for discretionary traders looking for visual pattern signals.
Can be extended into a rule-based strategy using @strategy.order() logic.
Works best on higher timeframes (1H+) where patterns are statistically meaningful.

License & Usage

Feel free to modify and use the code in personal or commercial projects, provided attribution is maintained. For contributions or suggestions, open a pull request or issue.

Source code (Indie Script Language V5)

# indie:lang_version = 5
from indie import indicator, param, plot, color, MainContext
from indie.algorithms import Ema, Atr
import math

# Define helper functions at global scope
def is_downtrend(fast_ema: float, slow_ema: float) -> bool:
    return fast_ema < slow_ema

def is_uptrend(fast_ema: float, slow_ema: float) -> bool:
    return fast_ema > slow_ema

def is_significant_body(body: float, atr_value: float, minimum_body_atr: float) -> bool:
    return body > minimum_body_atr * atr_value

def is_doji(ctx: MainContext, i: int, atr_value: float, doji_ratio: float) -> bool:
    high, low = ctx.high[i], ctx.low[i]
    open_, close = ctx.open[i], ctx.close[i]
    body = abs(close - open_)
    range_ = high - low
    
    # Check if range is significant compared to market volatility
    is_significant = range_ > 0.3 * atr_value
    
    # Traditional doji has very small body relative to range
    return is_significant and body <= doji_ratio * range_

def is_small_body(ctx: MainContext, i: int) -> bool:
    open_, close = ctx.open[i], ctx.close[i]
    high, low = ctx.high[i], ctx.low[i]
    body = abs(close - open_)
    range_ = high - low
    
    return body < 0.3 * range_

def is_bullish_engulfing(ctx: MainContext, atr_value: float, minimum_body_atr: float, volume_ratio: float) -> bool:
    body_prev = abs(ctx.close[1] - ctx.open[1])
    body_curr = abs(ctx.close[0] - ctx.open[0])
    
    # Check for significant body size
    is_significant = is_significant_body(body_curr, atr_value, minimum_body_atr)
    
    return (
        ctx.close[1] < ctx.open[1] and  # Previous candle is bearish
        ctx.close[0] > ctx.open[0] and  # Current candle is bullish
        ctx.open[0] <= ctx.close[1] and ctx.close[0] >= ctx.open[1] and  # Body engulfing
        is_significant and
        ctx.volume[0] > ctx.volume[1] * volume_ratio  # Volume confirmation
    )

def is_bearish_engulfing(ctx: MainContext, atr_value: float, minimum_body_atr: float, volume_ratio: float) -> bool:
    body_prev = abs(ctx.close[1] - ctx.open[1])
    body_curr = abs(ctx.close[0] - ctx.open[0])
    
    # Check for significant body size
    is_significant = is_significant_body(body_curr, atr_value, minimum_body_atr)
    
    return (
        ctx.close[1] > ctx.open[1] and  # Previous candle is bullish
        ctx.close[0] < ctx.open[0] and  # Current candle is bearish
        ctx.open[0] >= ctx.close[1] and ctx.close[0] <= ctx.open[1] and  # Body engulfing
        is_significant and
        ctx.volume[0] > ctx.volume[1] * volume_ratio  # Volume confirmation
    )

def is_morning_star(ctx: MainContext, atr_value: float, minimum_body_atr: float, gap_atr_ratio: float) -> bool:
    open1, close1 = ctx.open[2], ctx.close[2]
    open2, close2 = ctx.open[1], ctx.close[1]
    open3, close3 = ctx.open[0], ctx.close[0]

    body1 = abs(close1 - open1)
    body3 = abs(close3 - open3)
    
    # First candle should be bearish and significant
    is_bearish1 = close1 < open1 
    is_significant1 = is_significant_body(body1, atr_value, minimum_body_atr)
    
    # Second candle should have a small body
    is_small_body2 = is_small_body(ctx, 1)
    
    # Third candle should be bullish and significant
    is_bullish3 = close3 > open3
    is_significant3 = is_significant_body(body3, atr_value, minimum_body_atr)
    
    # Check for gaps or near-gaps using ATR
    gap_down = min(open1, close1) - max(open2, close2) > gap_atr_ratio * atr_value
    gap_up = min(open3, close3) - max(open2, close2) > gap_atr_ratio * atr_value
    
    # Check if third candle closes above midpoint of first
    closes_above_midpoint = close3 > (open1 + close1) / 2

    return (
        is_bearish1 and is_significant1 and
        is_small_body2 and
        is_bullish3 and is_significant3 and
        closes_above_midpoint and
        (gap_down or gap_up)  # At least one gap should be present
    )

def is_evening_star(ctx: MainContext, atr_value: float, minimum_body_atr: float, gap_atr_ratio: float) -> bool:
    open1, close1 = ctx.open[2], ctx.close[2]
    open2, close2 = ctx.open[1], ctx.close[1]
    open3, close3 = ctx.open[0], ctx.close[0]

    body1 = abs(close1 - open1)
    body3 = abs(close3 - open3)
    
    # First candle should be bullish and significant
    is_bullish1 = close1 > open1
    is_significant1 = is_significant_body(body1, atr_value, minimum_body_atr)
    
    # Second candle should have a small body
    is_small_body2 = is_small_body(ctx, 1)
    
    # Third candle should be bearish and significant
    is_bearish3 = close3 < open3
    is_significant3 = is_significant_body(body3, atr_value, minimum_body_atr)
    
    # Check for gaps or near-gaps using ATR
    gap_up = min(open2, close2) - max(open1, close1) > gap_atr_ratio * atr_value
    gap_down = min(open2, close2) - max(open3, close3) > gap_atr_ratio * atr_value
    
    # Check if third candle closes below midpoint of first
    closes_below_midpoint = close3 < (open1 + close1) / 2

    return (
        is_bullish1 and is_significant1 and
        is_small_body2 and
        is_bearish3 and is_significant3 and
        closes_below_midpoint and
        (gap_up or gap_down)  # At least one gap should be present
    )

def is_hammer(ctx: MainContext, in_downtrend: bool, atr_value: float, shadow_body_ratio: float) -> bool:
    open_, close = ctx.open[0], ctx.close[0]
    high, low = ctx.high[0], ctx.low[0]
    body = abs(close - open_)
    range_ = high - low
    upper_shadow = high - max(open_, close)
    lower_shadow = min(open_, close) - low
    
    is_significant = range_ > 0.5 * atr_value
    
    return (
        in_downtrend and
        is_significant and
        body > 0 and  # Ensure there is a body
        lower_shadow > shadow_body_ratio * body and  # Long lower shadow
        upper_shadow < 0.5 * body and  # Small upper shadow
        close >= open_  # Preferably bullish (close >= open)
    )

def is_shooting_star(ctx: MainContext, in_uptrend: bool, atr_value: float, shadow_body_ratio: float) -> bool:
    open_, close = ctx.open[0], ctx.close[0]
    high, low = ctx.high[0], ctx.low[0]
    body = abs(close - open_)
    range_ = high - low
    upper_shadow = high - max(open_, close)
    lower_shadow = min(open_, close) - low
    
    is_significant = range_ > 0.5 * atr_value
    
    return (
        in_uptrend and
        is_significant and
        body > 0 and  # Ensure there is a body
        upper_shadow > shadow_body_ratio * body and  # Long upper shadow
        lower_shadow < 0.5 * body and  # Small lower shadow
        close <= open_  # Preferably bearish (close <= open)
    )

def is_dark_cloud_cover(ctx: MainContext, in_uptrend: bool, atr_value: float, minimum_body_atr: float) -> bool:
    open1, close1 = ctx.open[1], ctx.close[1]
    open2, close2 = ctx.open[0], ctx.close[0]
    
    body1 = abs(close1 - open1)
    body2 = abs(close2 - open2)
    body_mid = (open1 + close1) / 2
    
    is_significant1 = is_significant_body(body1, atr_value, minimum_body_atr)
    is_significant2 = is_significant_body(body2, atr_value, minimum_body_atr)
    
    return (
        in_uptrend and
        close1 > open1 and  # First candle is bullish
        close2 < open2 and  # Second candle is bearish
        open2 > close1 and  # Second candle opens above first candle's close
        close2 < body_mid and  # Second candle closes below midpoint of first
        close2 > open1 and  # Second candle doesn't close below first candle's open
        is_significant1 and is_significant2
    )

def is_piercing(ctx: MainContext, in_downtrend: bool, atr_value: float, minimum_body_atr: float) -> bool:
    open1, close1 = ctx.open[1], ctx.close[1]
    open2, close2 = ctx.open[0], ctx.close[0]
    
    body1 = abs(close1 - open1)
    body2 = abs(close2 - open2)
    body_mid = (open1 + close1) / 2
    
    is_significant1 = is_significant_body(body1, atr_value, minimum_body_atr)
    is_significant2 = is_significant_body(body2, atr_value, minimum_body_atr)
    
    return (
        in_downtrend and
        close1 < open1 and  # First candle is bearish
        close2 > open2 and  # Second candle is bullish
        open2 < close1 and  # Second candle opens below first candle's close
        close2 > body_mid and  # Second candle closes above midpoint of first
        close2 < open1 and  # Second candle doesn't close above first candle's open
        is_significant1 and is_significant2
    )

def is_three_black_crows(ctx: MainContext, in_uptrend: bool, atr_value: float, minimum_body_atr: float) -> bool:
    # Calculate bearish body sizes
    b1 = ctx.open[2] - ctx.close[2]
    b2 = ctx.open[1] - ctx.close[1]
    b3 = ctx.open[0] - ctx.close[0]
    
    # Calculate shadows
    upper_shadow1 = ctx.high[2] - ctx.open[2]
    upper_shadow2 = ctx.high[1] - ctx.open[1]
    upper_shadow3 = ctx.high[0] - ctx.open[0]
    
    lower_shadow1 = ctx.close[2] - ctx.low[2]
    lower_shadow2 = ctx.close[1] - ctx.low[1]
    lower_shadow3 = ctx.close[0] - ctx.low[0]
    
    # Significant bodies and small shadows relative to bodies
    are_significant = (
        b1 > minimum_body_atr * atr_value and 
        b2 > minimum_body_atr * atr_value and 
        b3 > minimum_body_atr * atr_value
    )
    
    small_shadows = (
        upper_shadow1 < 0.3 * b1 and upper_shadow2 < 0.3 * b2 and upper_shadow3 < 0.3 * b3 and
        lower_shadow1 < 0.3 * b1 and lower_shadow2 < 0.3 * b2 and lower_shadow3 < 0.3 * b3
    )
    
    # Each opens within the previous candle's body (traditional definition)
    proper_opens = (
        ctx.open[1] <= ctx.open[2] and ctx.open[1] >= ctx.close[2] and
        ctx.open[0] <= ctx.open[1] and ctx.open[0] >= ctx.close[1]
    )
    
    return (
        in_uptrend and
        # All three candles are bearish
        ctx.close[2] < ctx.open[2] and ctx.close[1] < ctx.open[1] and ctx.close[0] < ctx.open[0] and
        # Each closes lower than the previous
        ctx.close[1] < ctx.close[2] and ctx.close[0] < ctx.close[1] and
        are_significant and
        small_shadows and
        proper_opens
    )

def is_three_white_soldiers(ctx: MainContext, in_downtrend: bool, atr_value: float, minimum_body_atr: float) -> bool:
    # Calculate bullish body sizes
    b1 = ctx.close[2] - ctx.open[2]
    b2 = ctx.close[1] - ctx.open[1]
    b3 = ctx.close[0] - ctx.open[0]
    
    # Calculate shadows
    upper_shadow1 = ctx.high[2] - ctx.close[2]
    upper_shadow2 = ctx.high[1] - ctx.close[1]
    upper_shadow3 = ctx.high[0] - ctx.close[0]
    
    lower_shadow1 = ctx.open[2] - ctx.low[2]
    lower_shadow2 = ctx.open[1] - ctx.low[1]
    lower_shadow3 = ctx.open[0] - ctx.low[0]
    
    # Significant bodies and small shadows relative to bodies
    are_significant = (
        b1 > minimum_body_atr * atr_value and 
        b2 > minimum_body_atr * atr_value and 
        b3 > minimum_body_atr * atr_value
    )
    
    small_shadows = (
        upper_shadow1 < 0.3 * b1 and upper_shadow2 < 0.3 * b2 and upper_shadow3 < 0.3 * b3 and
        lower_shadow1 < 0.3 * b1 and lower_shadow2 < 0.3 * b2 and lower_shadow3 < 0.3 * b3
    )
    
    # Each opens within the previous candle's body (traditional definition)
    proper_opens = (
        ctx.open[1] >= ctx.open[2] and ctx.open[1] <= ctx.close[2] and
        ctx.open[0] >= ctx.open[1] and ctx.open[0] <= ctx.close[1]
    )
    
    return (
        in_downtrend and
        # All three candles are bullish
        ctx.close[2] > ctx.open[2] and ctx.close[1] > ctx.open[1] and ctx.close[0] > ctx.open[0] and
        # Each closes higher than the previous
        ctx.close[1] > ctx.close[2] and ctx.close[0] > ctx.close[1] and
        are_significant and
        small_shadows and
        proper_opens
    )

@indicator('Enhanced Candlestick Patterns v3', overlay_main_pane=True)
@param.float('doji_ratio', default=0.05, min=0.01, max=0.2, title='Doji Body/Range Ratio')
@param.float('shadow_body_ratio', default=2.0, min=1.0, max=5.0, title='Shadow/Body Ratio')
@param.float('minimum_body_atr', default=0.3, min=0.1, max=1.0, title='Minimum Body/ATR Ratio')
@param.float('gap_atr_ratio', default=0.1, min=0.0, max=0.5, title='Gap/ATR Ratio')
@param.float('volume_ratio', default=1.2, min=1.0, max=3.0, title='Volume Increase Ratio')
@param.int('fast_ema', default=20, min=5, max=50, title='Fast EMA Length')
@param.int('slow_ema', default=50, min=20, max=200, title='Slow EMA Length')
# Bullish Patterns (varying shades of green/teal)
@plot.marker(color=color.GREEN, text='BE', style=plot.marker_style.LABEL, position=plot.marker_position.BELOW)  # Bullish Engulfing
@plot.marker(color=color.TEAL, text='MORN', style=plot.marker_style.LABEL, position=plot.marker_position.BELOW)  # Morning Star
@plot.marker(color=color.LIME, text='H', style=plot.marker_style.LABEL, position=plot.marker_position.BELOW)  # Hammer
@plot.marker(color=color.rgba(0, 180, 80, 1), text='P', style=plot.marker_style.LABEL, position=plot.marker_position.BELOW)  # Piercing
@plot.marker(color=color.rgba(0, 128, 64, 1), text='TWS', style=plot.marker_style.LABEL, position=plot.marker_position.BELOW)  # Three White Soldiers

# Bearish Patterns (varying shades of red/purple)
@plot.marker(color=color.RED, text='SE', style=plot.marker_style.LABEL, position=plot.marker_position.ABOVE)  # Bearish Engulfing
@plot.marker(color=color.PURPLE, text='EVE', style=plot.marker_style.LABEL, position=plot.marker_position.ABOVE)  # Evening Star
@plot.marker(color=color.FUCHSIA, text='SS', style=plot.marker_style.LABEL, position=plot.marker_position.ABOVE)  # Shooting Star
@plot.marker(color=color.rgba(180, 0, 80, 1), text='DCC', style=plot.marker_style.LABEL, position=plot.marker_position.ABOVE)  # Dark Cloud Cover
@plot.marker(color=color.MAROON, text='TBC', style=plot.marker_style.LABEL, position=plot.marker_position.ABOVE)  # Three Black Crows
def Main(self, doji_ratio, shadow_body_ratio, minimum_body_atr, gap_atr_ratio, volume_ratio, fast_ema, slow_ema):
    # Main indicator logic
    h = self.high[0] - self.low[0]

    # Compute indicators
    fast_ema_series = Ema.new(self.close, fast_ema)
    slow_ema_series = Ema.new(self.close, slow_ema)
    atr14 = Atr.new(14)

    in_downtrend = is_downtrend(fast_ema_series[0], slow_ema_series[0])
    in_uptrend = is_uptrend(fast_ema_series[0], slow_ema_series[0])

    return (
        self.low[0] - h * 0.05 if is_bullish_engulfing(self, atr14[0], minimum_body_atr, volume_ratio) else math.nan,
        self.high[0] + h * 0.05 if is_bearish_engulfing(self, atr14[0], minimum_body_atr, volume_ratio) else math.nan,
        self.low[0] - h * 0.1 if is_morning_star(self, atr14[0], minimum_body_atr, gap_atr_ratio) else math.nan,
        self.high[0] + h * 0.1 if is_evening_star(self, atr14[0], minimum_body_atr, gap_atr_ratio) else math.nan,
        self.low[0] - h * 0.15 if is_hammer(self, in_downtrend, atr14[0], shadow_body_ratio) else math.nan,
        self.high[0] + h * 0.15 if is_shooting_star(self, in_uptrend, atr14[0], shadow_body_ratio) else math.nan,
        self.high[0] + h * 0.2 if is_dark_cloud_cover(self, in_uptrend, atr14[0], minimum_body_atr) else math.nan,
        self.low[0] - h * 0.2 if is_piercing(self, in_downtrend, atr14[0], minimum_body_atr) else math.nan,
        self.high[0] + h * 0.25 if is_three_black_crows(self, in_uptrend, atr14[0], minimum_body_atr) else math.nan,
        self.low[0] - h * 0.25 if is_three_white_soldiers(self, in_downtrend, atr14[0], minimum_body_atr) else math.nan
    )

Enhanced Candlestick Patterns v3 (Indie v5)

Table of Contents

Enhanced Candlestick Patterns v3 (Indie v5)

Overview

Patterns Detected

Strategy & Algorithmic Approach

Trend Detection

ATR-Based Volatility Normalization

Volume Confirmation

Example: Morning Star Logic (Simplified)

Parameters

Educational Notes for Indie Learners

Visual Output

Performance Considerations

Use Case

License & Usage