Repainting and Non Repainting Harmonic Pattern Indicator
In this article, we will talk about repainting and non repainting Harmonic Pattern Indicator used in Forex and Stock trading. The explanation you will find here is also relevant to explain the repainting and non repainting indicator in general. The difference between repainting and non-repainting Harmonic Pattern Indicator is that non-repainting indicator signals should remain unchanged on all closed bars. If the signals are being replaced or disappeared after price bars close, then that is a repainting Harmonic Pattern indicator. To find out the real difference, you need to understand how the underlying algorithm works before the indicator generates the trading signal.
In spite of the superb non-lagging pattern detection with the Zig Zag indicator, the Zig Zag indicator can suffer from false peak and trough. This is something every trader should understand before using ZigZag mode in the Peak Trough Analysis. False peak and trough is sometimes considered as repainting in the trading community. However, repainting is marginally different meaning from its actual behaviour in fact. The correct description for the false peak and false trough is the dynamic update.
False peak and trough is found because basic calculation unit is a peak and trough in the Zig Zag indicator. Since the latest peak or trough appears over undecided length of multiple candle bars, the dynamic update would affect the position of the latest peak or trough in your chart. This dynamic update over multiple candle bar is the unique characteristic found in ZigZag indicator.
However, as you might see from the explanation, there is nothing wrong with it. For example, let us consider simple moving average indicator. In simple moving average indicator, the basic calculation unit is one candle bar. Hence, the latest value of moving average indicator will dynamically update on the arrival of new price. The latest value in the last candle bar will be undetermined until next new bar is formed. Likewise, in the ZigZag indicator, latest turning point would be undetermined until next turning point is formed. For example, latest peak might be extending until we find next new trough and latest trough might be extending until we find next new peak in our chart. What they do is that they are just updating its latest calculation when new information arrives in both indicators. The difference is that dynamic update is happening over multiple candle bars in ZigZag indicator whereas it happens in one candle bar in moving average indicator. Hence, they are exactly doing their job as they are designed.
After the trough 4 appears, the Zig Zag indicator will detect the false peak 4-A at 1.0602 level because the high of the 3rd candle bar is the highest peak after trough 4. As the price continue to move up, the Zig Zag indicator will keep overriding the false peak 4-A with the false peak 4-B and 4-B with 4-C later until the true peak 4 arrive at 1.0675 level. This would happen until we have a prospective trough after Peak 4. Until new prospective trough appears, ZigZag algorithm will dynamically update on the arrival of new high price on its latest peak. This dynamic update will affect the candle bars from previous turning point to latest turning point. For example, if there are 23 candle bars between previous trough and latest peak, then the dynamic update will override the ZigZag calculation over the 23 candle bars. If the price extends new high over 30 candle bars with new price arrival, then again the dynamic update will override the ZigZag calculation over the 30 candle bars. However, all the other ZigZag values behind the previous trough would remain the same. The dynamic update will not affect the previous calculation. Understanding this behaviour of ZigZag indicator is important before we go on for the pattern detection with the Peak Trough Analysis Tool.
False peak and trough problem is technically inevitable. False peak and trough problem is the trade off with the benefit of non-lagging turning point detection using ZigZag indicator. For this reason, all the automated scanner for Harmonic Pattern, Elliott Wave patterns and X3 pattern in the market are suffering from the same false peak and trough problem. People might call this as repainting. At least, we have clearly demonstrated the advantage and disadvantage of ZigZag indicator for the pattern detection. You should use the Peak Trough Analysis understanding these advantages and disadvantages.
Here is some quick guide on repainting and non repainting Harmonic Pattern indicators. Pattern Scanner based on Fractal Wave detection algorithm can be either repainting or non repainting one. In our products, we provide two choices between repainting and non repainting. Their capability and their price is different.
For Harmonic Pattern Scanner,
Harmonic Pattern Plus (and also Harmonic Pattern Scenario Planner) is the powerful but they are the repainting Harmonic Pattern Scanner. At the same time, they are cheaper. Below is links for them.
Typically it is easier to trade with non repainting and non lagging Harmonic Pattern indicator. Of course, the signal will be reserved once they are detected. Hence, if you do not mind the cost, we recommend to use X3 Chart Pattern Scanner since it is non repainting Harmonic Pattern and X3 pattern indicator. However, if you do not mind repainting Harmonic Pattern Indicator and you want to have something cheaper, then use Harmonic Pattern Plus (or Harmonic Pattern Scenario Planner). Many traders are still do not mind to use the repainting Harmonic Pattern Indicator. They are cheaper too. If you are the starter, we do recommend using non repainting Harmonic Pattern Scanner like X3 Chart Pattern Scanner. It is easier to trade with non repainting indicator. At the same time, there are a lot of bonus features inside X3 Chart Pattern Scanner too. For your information, we are the only one who supply non repainting and non lagging Harmonic Pattern Indicator in the world. Of course, the first one in the world too.
In addition, you can watch the YouTube Video to feel what is the automated harmonic pattern indicator like. For your information, we provides two YouTube videos with title and links below.