Chart Pattern Detection on Multiple Timeframe
In this article, we will explain the chart pattern detection and how to use the chart pattern with the technical indicator for the day trading. X3 Chart Pattern Scanner comes with the ability of detecting pattern across different timeframe. This feature is handy because you can scan potential buy and sell signal from one chart only. Here we show how to do it in your chart. Simply go to input setting. Then set “Use Multiple Timeframe Pattern Detection” = true. Check the screenshot for the procedure.
Of course, the pattern detection at multiple timeframe will force 6 to 9 times heavier computation to your MetaTrader. Hence, this will push your CPU and Memory higher. Before using this multiple timeframe feature, please do understand the trade off between heavy computation and the CPU and memory. If your computer has strong CPU and bigger RAM, then this would be no problem.
Most of technical indicators uses the smoothing algorithm. In spite of the fact that the smoothing algorithm can reduce the noise in the price data, this causes the technical indicators to lag in price and time. The chart pattern or price pattern is usually considered to produce the faster trading signals than the technical indicator because they do not rely on the smoothing algorithm. Hence, the good way to combine both of them are to use the price patterns as the main strategy and to use the technical indicator as the secondary confirmation. Combining these two entirely different techniques can improve the trading performance comparing to the trading practice when each technique is used separately.
In general, the oscillator Indicators that technically identify overbought and oversold area can be the useful secondary confirmation for the price patterns. For example, Relative Strength Index (RSI) and Commodity Channel Index (CCI) can be used to confirm the turning point predicted by Harmonic Pattern and X3 Chart Pattern. When we use Relative Strength Index as the secondary confirmation, we can use RSI value 30 to confirm the bullish turning point. Likewise, we can use RSI value 70 to confirm the bearish turning point.
You can also use the Commodity Channel index as the secondary confirmation. For example, you can use CCI value 150 to confirm the bearish turning point. Likewise, you can use the CCI value -150 to confirm the bullish turning point. This is the rule of thumb only as the range of the CCI values is often marginally different per the instrument.
In addition to the Oscillators, the Bollinger Bands can be also used together as the secondary confirmation. When we use the Bollinger Bands, we can use the upper bands and lower bands. For example, we will often see the price move outside the lower bands when we predict the bullish turning point. Likewise, we will often see the price move outside the upper bands when we predict the bearish turning point.
Combining the price patterns with the technical indicator can be helpful. Especially, when you are the beginner with the price pattern, this method is readily available. However, there are some disadvantages with this method too. For example, due to the averaging nature of the smoothing algorithm, the technical indicator could become out of rhythm with the actual price movement.
Link to X3 Chart Pattern Scanner
https://www.mql5.com/en/market/product/41993
https://www.mql5.com/en/market/product/41992
https://algotrading-investment.com/portfolio-item/profitable-pattern-scanner/
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