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212 Candle Pattern


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ReyesWhite

First Post: Nov 9, 2013 6:41am

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Post 1

| Joined Apr 2013 | Status: I like to be where the actions at | 158 Posts

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The 212 Candle Pattern is something i have come across recently. I'm sure there is other people who use the same formation,
but as far as i'm aware i'm the first person to actually publicly talk about it. The candle pattern aim is to predict the next bar,
not the next 2, 3 or 5 but only the next bar. This especially works well on the Hour 4 chart or Daily.
Aim: To predict the next bar
Success Rate: After backtesting (You can do this too) you will find a high ammount of probable trades. After i tested around
100 of these patterns it was successful at predicting the next bar 70% of the time.
Most traders try and make trading systems difficult, but in fact trading can be as simple as you make it.
The Name: The name of the pattern is basically what it says on the tin. 2 Bull or Bear candles followed by an opposite candle,
then followed by 2 more Bull or Bear candles depending whether you're buying or selling. For instance, in an up trend you
want to spot two bull candles followed by a bear candle followed by two more bull candles. After seeing this formation you can
be confident that the fifth candle will be bearish.
Attached Image

Here is another example of a trade.


Broker Specs
Attached Image

Why does this pattern work?


This pattern seems to work well as a pull back system. The candles show indecision in the market and a war between both
bulls and bears. A retracement already happened once after the first two candles and that's why we hope history will repeat its
self again.
Example of a bad trade:
Attached Image

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08:24 18/10/2015
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Another bad trade


Attached Image

Examples of Good trades which work well. To identify the trend try to use a 50 EMA or 20 EMA to filter the signals. Also
note that we're only predicting the next bar, not the next 3,4 or 5 bars. Don't be greedy.
Attached Image

http://www.forexfactory.com/showthread.php?t=456520

08:24 18/10/2015
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Timeframe: H4, Daily, Weekly, Monthly


Stop / Take Profit: Haven't worked this out yet

BeginnerJoe

Nov 9, 2013 7:45am | Edited at 8:01am

Quote

Post 2

| Joined Nov 2013 | Status: Member | 612 Posts

If there are 4 green bars and 1 red bar, the bulls are charging. It would be suicidal to go stand in front of them. As shown by
the bad trade, you'd get flattened by the stampede.
Curve fitting historical bars that don't fight back is not much use. Magic pattens are best tested against a real money micro
account. That way you get to eliminate them quickly.
One thing worth noting is that the guy/entity taking the other side of your trade doesn't respect bars. Their only interest is to
buy low, and sell high. So pattern searching could be in vain because the future bars adapts to your current action. In other
words the bars yet to appear will often be contrary to your interest.

shellsnail

Nov 9, 2013 7:52am

Quote

Post 3

Quote

Post 4

Joined Aug 2012 | Status: Sentiment, trends, levels, tape | 1,674 Posts

A quick scan at weekly and monthly charts suggests that this works.
Forget about profits. Focus on expectancy.

FerruFx

Nov 9, 2013 8:31am


Joined May 2007 | Status: MT4 EAs/Indicators/Alerts coder | 4,710 Posts

Quoting BeginnerJoe

If there are 4 green bars and 1 red bar, the bulls are charging. It would be suicidal to go stand in front of them. As
shown by the bad trade, you'd get flattened by the stampede. Curve fitting historical bars that don't fight back is
not much use. Magic pattens are best tested against a real money micro account. That way you get to eliminate
them quickly. One thing worth noting is that the guy/entity taking the other side of your trade doesn't respect bars.
Their only interest is to buy low, and sell high. So pattern searching could be in vain...
To filter bad trades, instead of an entry right at the pattern close, I would enter if the following candle show momentum in the
right direction (entry at previous candle break).
MT4 EAs/Indicators/Alerts coder

http://www.forexfactory.com/showthread.php?t=456520

08:24 18/10/2015
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BeginnerJoe

Nov 9, 2013 8:44am

Quote

Post 5

| Joined Nov 2013 | Status: Member | 612 Posts

Quoting FerruFx

{quote} To filter bad trades, instead of an entry right at the pattern close, I would enter if the following candle show
momentum in the right direction (entry at previous candle break).
But by the time the momentum is certain, the move could be over. Filtering may not necessarily be better than following the
pattern blindly.
CHF/JPY currently has this 12121 pattern in the daily time frame. How many here would have dared to go counter trend right
at the bottom ? Short of complete beginners, I'd say none.

BeginnerJoe

Nov 9, 2013 8:58am

Quote

Post 6

| Joined Nov 2013 | Status: Member | 612 Posts

Here could be an example of someone taken to the cleaners for doing 12121. Perhaps he would be saved if he did 12131. But
then the guy/entity on the other side of the trade might want to do silly buggers with the next bar.
Attached Image

Nov 9, 2013 9:43am

Rtm

Quote

Post 7

Joined Jan 2011 | Status: health ! | 3,102 Posts

I think this would be good for renko or range bars, just finding the right setting might need to based on the pair you are
watching % daily movement, because using defaults settings will just you a lot of bars that mean nothing in relation to this
strat.

iwjw

Nov 9, 2013 12:34pm | Edited Nov 10, 2013 3:44am added candle b4 pattern start

Quote

Post 8

Quote

Post 9

| Joined Mar 2011 | Status: Member | 350 Posts

Little help to find the pattern


edit:
modified version that checks the candle b4 pattern start
Attached File
_212_pattern.mq4

juicyt

1 KB | 1,500 download

Nov 9, 2013 6:12pm


| Commercial Member | Joined May 2008 | 406 Posts

I will check it out but thanks all the same. Keep in mind people you should be able to trade it with a pretty tight stop and
positive (maybe 2:1) Reward to risk. Accept the losses, nothing is 100%
jt
"Even if you fall down face first, you still went forward."

shovon21

Nov 9, 2013 6:35pm

Quote

Post 10

| Joined Oct 2013 | Status: Member | 6 Posts

Interesting. Not sure about spot forex but this strategy can be used in binary option trading.

http://www.forexfactory.com/showthread.php?t=456520

08:24 18/10/2015
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Nov 9, 2013 6:51pm


Joined May 2007 | Status: MT4 EAs/Indicators/Alerts coder | 4,710 Posts

FerruFx

Quote

Post 11

Quoting iwjw

Little help to find the pattern {file}


Great sharing. Thanks.
However you missed the fact that the first "2" of the pattern must be 2 and only 2 ... not 3-4 or whatever. That means that the
candle before the pattern start must be opposite.
You can see it explained in the bad examples pictures posted by the thread starter.
MT4 EAs/Indicators/Alerts coder

rtrs111

Nov 9, 2013 7:32pm

Quote

Post 12

| Joined Nov 2009 | Status: Member | 140 Posts

70% winning rate of predicting the color of the next candle would be profitable only if you would've tested for a 1:1
risk/reward ratio (including commissions). If you decide to put your stop under the wick of the signal candle, for longs for
example, enter at the signal candle (bear) close and exit at the close of the bull candle, then RR will fluctuate. You have to
backtest fixed RRs or if you prefer instead to have variable stops (under/above the wicks) and exits at the close of the candle,
then you'll have to calculate the R-multiple.
r u ready?

abokwaik

Nov 10, 2013 1:58am

Quote

Post 13

Joined Sep 2012 | Status: 010101010101 | 1,630 Posts

Hi,
I've quickly made an EA to test the 212 pattern with different options.
I hope that this will be helpful in evaluating this method and probably enhance it.
I ran a test on E/U H4 for 2013 and it was profitable. Results attached.
Regards,
Abokwaik
Attached Image (click to enlarge)

Attached File
212_pattern_EA.mq4

4 KB | 707 downloads

Vision without action is a daydream. Action without vision is a nightmare

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08:24 18/10/2015
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iwjw

Nov 10, 2013 3:45am | Edited at 5:11am corrected post#

Quote

Post 14

| Joined Mar 2011 | Status: Member | 350 Posts

Quoting FerruFx

{quote} Great sharing. Thanks. However you missed the fact that the first "2" of the pattern must be 2 and only 2
... not 3-4 or whatever. That means that the candle before the pattern start must be opposite. You can see it
explained in the bad examples pictures posted by the thread starter.
update now availlable in post #8

ARTjoMS

Nov 10, 2013 4:25am

Quote

Post 15

Nov 10, 2013 4:46am

Quote

Post 16

Quote

Post 17

Quote

Post 18

Quote

Post 19

| Joined Sep 2012 | Status: Member | 128 Posts

This is not really a trading system.

FerruFx

Joined May 2007 | Status: MT4 EAs/Indicators/Alerts coder | 4,710 Posts

Quoting ARTjoMS

This is not really a trading system.


This is a pattern like many other patterns. Just find out the best way to trade it ...
MT4 EAs/Indicators/Alerts coder

FerruFx

Nov 10, 2013 4:48am


Joined May 2007 | Status: MT4 EAs/Indicators/Alerts coder | 4,710 Posts

Quoting iwjw

{quote} update now availlable in post #9


Post #8
Thanks.
MT4 EAs/Indicators/Alerts coder

iwjw

Nov 10, 2013 7:00am


| Joined Mar 2011 | Status: Member | 350 Posts

if you trade the pattern only, I don't see it profitable


SL=TP=0 -> lifetime of the trade is one candle
otherwise until either sl or tp is hit
default lot is 0.01 so you may have to adjust to 0.1 or whatever if the account doesn't support micro
Attached File
_212_pattern_EA.mq4

Grill-Gite

6 KB | 418 downloads

Nov 10, 2013 11:52am


| Joined Jul 2013 | Status: Member | 5 Posts

Quoting BeginnerJoe

{quote} But by the time the momentum is certain, the move could be over. Filtering may not necessarily be better
than following the pattern blindly. CHF/JPY currently has this 12121 pattern in the daily time frame. How many here
would have dared to go counter trend right at the bottom ? Short of complete beginners, I'd say none.
I don't see where the CHY/JPY has the pattern in the daily chart. The past 6 bars are alternating red and green. No two bars in
a row there.

Grill-Gite

Nov 10, 2013 11:54am

Quote

Post 20

| Joined Jul 2013 | Status: Member | 5 Posts

Looks like the USD/CAD has this pattern today. I don't know if this is a good trade though with the US having a bank holiday.
Seems there have been some good news for the CAD recently and the chart shows a double top.
Any thought?

http://www.forexfactory.com/showthread.php?t=456520

08:24 18/10/2015
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