Detecting Bullish Belt Hold Candlestick Pattern in Pine Script

Overview of Bullish Belt Hold Candlestick Pattern

The “Bullish Belt Hold” candlestick pattern is a notable bullish reversal indicator that typically occurs during a downtrend. It is characterized by a long bullish (upward) candle that opens at its low and closes near its high, with little or no lower shadow.

This pattern suggests a strong shift in market sentiment from bearish to bullish, often signaling the start of an upward price movement. The lack of a lower shadow indicates that buyers took control from the opening and dominated the trading session, pushing prices upwards. Traders often view this pattern as a cue to consider entering long positions, especially when it is confirmed by subsequent bullish candles or other bullish indicators.

Importance in Technical Analysis

The Bullish Belt Hold candlestick pattern is important in technical analysis for several reasons:

1. Bullish Reversal Signal: It acts as a strong indicator of a potential bullish reversal, especially when it appears after a downtrend, suggesting a shift in market sentiment from bearish to bullish.
2. Early Detection of Trend Changes: The pattern provides traders with an early signal of a possible change in the trend, allowing them to position themselves advantageously as the market potentially shifts upwards.
3. High Reliability: The distinct formation of a long bullish candle with no or a very small lower shadow makes it a relatively reliable and easy-to-identify pattern.
4. Risk Management: Recognizing this pattern helps in effective risk management, guiding traders on potential entry and exit points in their trades.
5. Volume Correlation: The significance of the Bullish Belt Hold pattern is often enhanced when it is accompanied by high trading volume, indicating strong market participation in the bullish move.

Example From Trading View

Defining the Bullish Belt Hold Candlestick Pattern Criteria

The Bullish Belt Hold candlestick pattern is defined by a specific set of criteria that characterize its formation:

1. Occurrence in a Downtrend: The pattern typically emerges during a downtrend, indicating a potential reversal point.
2. Single Long Candle: It consists of a single long bullish (upward) candle. The length of this candle is important as it indicates strong buying pressure.
3. Opening at Low: The bullish candle opens at its lowest point for the day. This opening level is crucial as it marks the start of the buying momentum.
4. Closing Near High: The candle closes near its highest point, showing that buyers maintained control throughout the trading session.
5. Little or No Lower Shadow: The Bullish Belt Hold usually has little to no lower shadow, demonstrating that the opening price was the low for the day.

Code For Detecting Bullish Belt Hold

//@version=5
indicator("Bullish Belt Hold", overlay=true)

// Define the lowest low of the last 10 bars
lowestLow = ta.lowest(10)[1]

// Conditions for Bullish Belt Hold
isBullishBeltHold = (low == open) and (open < lowestLow) and (open < close) and (close > ((high[1] - low[1]) / 2 + low[1]))

// Create a label with background color when the condition is met
if isBullishBeltHold
    label.new(bar_index, high, "Bullish Belt Hold", style=label.style_label_down, color=color.yellow, textcolor=color.black, size=size.normal, yloc=yloc.abovebar)

// Apply background color
bgcolor(isBullishBeltHold ? color.new(color.yellow, 90) : na)

Output

Overview of the script 

1. Indicator Declaration

//@version=5
indicator("Bullish Belt Hold", overlay=true)

• //@version=5: Specifies that this script is written in Pine Script version 5.
• indicator(...): Declares a new indicator named “Bullish Belt Hold”.
• overlay=true: Indicates that the indicator will be plotted directly on the price chart.

2. Defining the Lowest Low of the Last 10 Bars

lowestLow = ta.lowest(10)[1]

• lowestLow: A variable to store the lowest low value among the last 10 bars, excluding the current bar.
• ta.lowest(10)[1]: The ta.lowest(10) function finds the lowest low over the past 10 bars. [1] accesses the value from one bar ago (previous bar), not the current bar.

3. Conditions for Bullish Belt Hold

isBullishBeltHold = (low == open) and (open < lowestLow) and (open < close) and (close > ((high[1] - low[1]) / 2 + low[1]))

• isBullishBeltHold: A boolean variable set to true if the conditions for the Bullish Belt Hold pattern are met.
• (low == open): Checks if the low and the opening price of the current bar are the same, indicating no lower shadow and a strong opening buying pressure.
• (open < lowestLow): Ensures that the opening price of the current bar is lower than the lowest low of the previous 10 bars, signifying the pattern occurs after a downtrend.
• (open < close): Confirms that the current bar is bullish (closing price is higher than the opening price).
• (close > ((high[1] - low[1]) / 2 + low[1])): This condition checks if the closing price is higher than the midpoint of the previous bar’s range, strengthening the bullish reversal signal.

4. Creating a Label with Background Color for the Condition

if isBullishBeltHold
    label.new(bar_index, high, "Bullish Belt Hold", style=label.style_label_down, color=color.yellow, textcolor=color.black, size=size.normal, yloc=yloc.abovebar)

• This block of code creates a label on the chart when the isBullishBeltHold condition is true.
• label.new(...): Creates a new label.
  • bar_index and high determine the label’s position (at the high of the current bar).
  • "Bullish Belt Hold": The text displayed in the label.
  • style=label.style_label_down: Setsthe style of the label to a downward arrow. – color=color.yellow: Defines the label’s background color as yellow. – textcolor=color.black: Sets the text color of the label to black. – size=size.normal: Specifies the size of the label as normal. – yloc=yloc.abovebar: Positions the label above the bar to avoid obscuring candlestick details.

5. Applying Background Color for the Condition

bgcolor(isBullishBeltHold ? color.new(color.yellow, 90) : na)

• bgcolor(...): Changes the background color of the chart.
• isBullishBeltHold ? color.new(color.yellow, 90) : na: If isBullishBeltHold is true, sets a semi-transparent yellow background (90% opacity) to highlight the pattern. If false, no background color is applied (na).

Frequently Asked Questions

Conclusion

This script is designed for detecting the Bullish Belt Hold candlestick pattern, a crucial indicator for identifying potential bullish reversals in downtrends. Automating the detection, it enables traders to quickly and accurately spot significant shifts in market momentum, enhancing decision-making in trading strategies. The addition of visual labels and background coloring aids in easy pattern recognition, improving the user’s ability to respond promptly to emerging trading opportunities. Tailored for Pine Script version 5, this tool is invaluable for traders who rely on candlestick patterns, emphasizing the importance of integrating it with other technical analysis methods for more comprehensive market insights.