Description
The ThreeBarInsideBarSE strategy generates a Short Entry signal when a negative Three-Bar Inside Bar pattern occurs.
If an inside bar formed inside two lower closes, then it is considered to be a three-bar inside bar negative reversal. The negative Three-Bar Inside Bar pattern is recognized if:
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The first bar's Close price is higher 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 lower than that of the previous bar;
In the event of the negative Three-Bar Inside Bar pattern, this strategy generates the Short 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 ThreeBarInsideBarLE for long entries (with ProfitTargetLX and StopLossLX for long exits), ProfitTargetSX and StopLossSX for short 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.