Three Bar Reversal
Pattern recognition for three-bar reversal setups
Automatically identifies three-bar reversal patterns in price action — a well-known setup where a sequence of three bars signals a potential change in direction. Includes optional EMA-based trend confirmation to filter signals in the direction of the prevailing trend.
The Concept
This study automatically identifies the classic three-bar reversal pattern — a well-known candlestick formation that signals potential trend changes. The pattern consists of three consecutive bars where the sequence indicates a shift from one direction to the other. Optional EMA-based trend filtering ensures signals align with the broader trend context.
How to Read It
Triangle markers appear when a three-bar reversal pattern completes.
- Reversal Up (triangle below bar) marks a bullish three-bar reversal — potential long entry
- Reversal Down (triangle above bar) marks a bearish three-bar reversal — potential short entry
- When trend confirmation is enabled, only reversals aligned with the EMA relationship are shown
- The EMA relationship itself provides the broader directional context for filtering
Practical Tips
Enable the trend confirmation filter to significantly reduce false signals — trading reversals in the direction of the trend has a higher success rate. Adjust the Triangle Offset for visual clarity on your preferred chart type. The default 9/21 EMA combination is a well-established standard. Works on any chart type and timeframe.
Input & Settings
| No. | Input Name | Function |
|---|---|---|
| 1 | 9 EMA Length | Length of the fast EMA used for trend confirmation. Min: 1. Default: 9. |
| 2 | 9 EMA Offset | Number of bars to shift the fast EMA forward or backward. Min: -500, Max: 500. Default: 0. |
| 3 | 21 EMA Length | Length of the slow EMA used for trend confirmation. Min: 1. Default: 21. |
| 4 | 21 EMA Offset | Number of bars to shift the slow EMA forward or backward. Min: -500, Max: 500. Default: 0. |
| 5 | Enable Trend Confirmation (9 EMA >< 21 EMA) | When enabled, reversal signals are only shown when confirmed by the relationship between the 9 and 21 EMA. Default: Yes. |
| 6 | Triangle Offset (in Ticks) | Distance in ticks to offset the reversal signal arrows from the bar high/low. Min: 1, Max: 100. Default: 10. |
Length of the fast EMA used for trend confirmation. Min: 1. Default: 9.
Number of bars to shift the fast EMA forward or backward. Min: -500, Max: 500. Default: 0.
Length of the slow EMA used for trend confirmation. Min: 1. Default: 21.
Number of bars to shift the slow EMA forward or backward. Min: -500, Max: 500. Default: 0.
When enabled, reversal signals are only shown when confirmed by the relationship between the 9 and 21 EMA. Default: Yes.
Distance in ticks to offset the reversal signal arrows from the bar high/low. Min: 1, Max: 100. Default: 10.
Subgraphs
| No. | Subgraph Name | Function & Comments |
|---|---|---|
| 1 | 9 EMA | Default: Ignore. The 9-period EMA line. Can be enabled to display on the chart. |
| 2 | 21 EMA | Default: Ignore. The 21-period EMA line. Can be enabled to display on the chart. |
| 3 | Reversal Up | Default: Triangle Up. Marks the completion of a bullish three-bar reversal pattern below the signal bar. |
| 4 | Reversal Down | Default: Triangle Down. Marks the completion of a bearish three-bar reversal pattern above the signal bar. |
Default: Ignore. The 9-period EMA line. Can be enabled to display on the chart.
Default: Ignore. The 21-period EMA line. Can be enabled to display on the chart.
Default: Triangle Up. Marks the completion of a bullish three-bar reversal pattern below the signal bar.
Default: Triangle Down. Marks the completion of a bearish three-bar reversal pattern above the signal bar.
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