Request: Double/Triple Tops/Bottoms strategy

[jetaro]

I searched the strategies and do not see anything like that there.

Would it be possible to develop such a strategy?

Would nice if it included the usual bells and whistles, like how far to look back for tops/bottoms, how many tops/bottoms, able to auto-trade, set limits and stops, able to go long/short, optimizable parameters etc. Maybe also check if it's at a pivot point or support/resistance point.

Thanks in advance!

Jim

[Apprentice]

Sure, Can you describe the algorithm.
How tops / bottoms are defined.
Or provide reference.

[jetaro]

HI Apprentice, thank you for your reply.

Here is a link to it on investopedia.com
http://www.investopedia.com/university/ ... harts9.asp

I will post it here as well in case that site is down.

The triple top and triple bottom are reversal patterns that are formulated when a security attempts to move past a key level of support or resistance in the direction of the prevailing trend.

This chart pattern represents the market's attempt to move a security in a certain direction. After three failed attempts, the buyers (in the case of a top) or sellers (in the case of a bottom) give up, and the opposing group in the market takes a hold of the security, sending it downward (sellers) or upward (buyers).

Triple Top
This bearish reversal pattern is formed when a security that is trending upward tests a similar level of resistance three times without breaking through. Each time the security tests the resistance level, it falls to a similar area of support. After the third fall to the support level, the pattern is complete when the security falls through the support; the price is then expected to move in a downward trend.

The first step in this pattern is the creation of a new high in an uptrend that is stalled by selling pressure, which forms a level of resistance. The selling pressure causes the price to fall until it finds a level of support, as buyers move back into the security. The buying pressure sends the price back up to the area of resistance the security previously met. Again, the sellers enter the market and send the security back down to the support level.

This up-and-down movement is repeated for the third time; but this time the buyers, after failing three times, give up on the security, and the sellers take over. Upon falling through the level of support, the security is expected to trend downward.

This pattern can be difficult to spot in the early stages as it will initially look like a double-top pattern, which was discussed in a previous section. The most important thing here is that one waits for the price to move past the level of resistance before entering the security, as the security could actually just end up being range-bound, where it trades between the two levels for some time.

In the triple-top formation, each test of resistance at the upper end should be marked with declining volume at each successive peak. And again, when the price breaks below the support level, it should be accompanied by high volume.

Once the signal is formed, the price objective is based on the size of the chart pattern or the price distance between the level of resistance and support. This is then deducted from the breakout point.

Triple Bottom
This bullish reversal pattern has all of the same attributes as the triple top but signals a reversal of a downward trend. The triple-bottom pattern illustrates a security that is trading in a downtrend and attempts to fall through a level of support three times, each time moving back to a level of resistance. After the third attempt to push the price lower, the pattern is complete when the price moves above the resistance level and begins trading in an upward trend.

This pattern begins by setting a new low in a downtrend, which is followed by a rally to a high. This sets up the range of trading for the triple-bottom pattern. After hitting the high, the price again comes under selling pressure, which sends it back down to the previous low. Buyers again move back into the security at this support level, sending the price back up again, usually to the previous high.

This is repeated a third time, but after failing again to move to a new low, the pattern is complete when the security moves above the resistance level to begin trading in an uptrend.

In this pattern, volume plays a role similar to the triple top, declining at each trough as it tests the support level, which is a sign of diminishing selling pressure. Again, volume should be high on a breakout above the resistance level on the completion of the pattern.

The price objective will also initially be calculated as the distance of the chart pattern added to the price breakout. So if the chart pattern is formed between $50 and $30 at a price breakout of $50 the price objective is $70 ($50+$20).

[Apprentice]

Try this version.
viewtopic.php?f=31&t=63840&p=107974#p107974

[jetaro]

Wow apprentice you are fast! I thought maybe someday you might get to it in like a month or 2
Thank you for getting on it so quickly!

There seems to be an issue though, I think it's counting all prices within the range given, even if it's just one bar back. I think for it to match the strategy they have to be defined tops and bottoms, separated by waves for lack of a better term. I guess that's where our eyes can do a better job than a computer Can you maybe add a parameter that sets the minimum separation between the highs and lows?

Thanks again!

[Apprentice]

Your request is added to the development list, Under Id Number 3621
If someone is interested to do this task, please contact me.