Detecting Bullish Deliberation Candlestick Pattern in Pine Script

Overview of Bullish Deliberation Candlestick Pattern

The Bullish Deliberation candlestick pattern is a relatively rare formation in technical analysis, typically signaling a potential bullish reversal or a continuation of an existing uptrend. It is the opposite of the Bearish Deliberation pattern and is often considered a sign of growing bullish sentiment in the market. Here’s an overview of its structure and implications:

Structure of the Bullish Deliberation Pattern

The Bullish Deliberation pattern consists of three candles:

1. First Candle: A long black (or red) candle that continues the existing downtrend, indicating strong selling pressure.
2. Second Candle: Another long black (or red) candle, similar in size to the first, which opens lower than the previous close and also closes lower. This candle suggests that the bearish trend is continuing, but the absence of a significantly lower shadow can indicate that sellers are starting to lose their grip on the market.
3. Third Candle: A small Doji candle that opens at or near the close of the second candle. This candle is critical as it reflects uncertainty and a significant reduction in selling momentum. The small body and potentially long lower shadow indicate that sellers are struggling to push the price lower, and a reversal might be imminent.

Importance in Technical Analysis

In technical analysis, the Bullish Deliberation candlestick pattern holds significant importance due to its ability to provide insights into potential market reversals and sentiment shifts. Here are key reasons why this pattern is valued in technical analysis:

1. Reversal Signal: The Bullish Deliberation pattern is primarily recognized as a potential signal for a bullish reversal, especially when it appears at the end of a downtrend. It indicates that the selling pressure is diminishing and a trend reversal may be imminent.
2. Sentiment Indicator: This pattern reflects a change in market sentiment. The transition from long bearish candles to a small or Doji candle suggests a weakening of bearish momentum and a growing indecision or shift towards bullish sentiment.
3. Confirmation of Trend Change: While the pattern itself is a hint at a possible bullish reversal, traders often look for subsequent confirmation (like a bullish candle or an increase in volume) to validate the change in trend, enhancing the reliability of the signal.

Example From Trading View

Defining the Bullish Deliberation Candlestick Pattern Criteria

Code For Detecting Bullish Deliberation

//@version=5
indicator("Bullish Deliberation Pattern", shorttitle="BuDP", overlay=true)

// Function to check if the candle is bearish with a long real body
isBearishLongBody(candle) =>
    bodySize = math.abs(close[candle] - open[candle])
    bodySize > (high[candle] - low[candle]) * 0.6 and close[candle] < open[candle]

// Detecting downtrend
downtrend = close < ta.sma(close, 20)

// Criteria for the candles
firstCandleBearish = isBearishLongBody(2)
secondCandleBearish = isBearishLongBody(1) and close[1] < close[2]
thirdCandleSmallBody = math.abs(close - open) < (high - low) * 0.3
thirdCandleGapDown = open < close[1]

// Detecting the pattern
bullishDeliberationPattern = downtrend and firstCandleBearish and secondCandleBearish and thirdCandleSmallBody and thirdCandleGapDown

// Plotting using label
if bullishDeliberationPattern
    label.new(bar_index[1], high[1], "Bullish Deliberation", color=color.green, textcolor=color.white, style=label.style_label_down, yloc=yloc.abovebar)

Output

Overview of the script 

1. Indicator Declaration

//@version=5
indicator("Bullish Deliberation Pattern", shorttitle="BuDP", overlay=true)

• This is the script header with metadata.
• //@version=5: Specifies the Pine Script version to be used.
• indicator(...): Declares a new indicator named “Bullish Deliberation Pattern” with a short title “BuDP.” The overlay=true parameter means that the indicator will be plotted on the price chart.

2. Function to Check Bearish Candle with Long Body

isBearishLongBody(candle) =>
    bodySize = math.abs(close[candle] - open[candle])
    bodySize > (high[candle] - low[candle]) * 0.6 and close[candle] < open[candle]

• This function, isBearishLongBody, checks if a specified candle (candle) is bearish with a long real body. It calculates the absolute size of the candle’s body and checks if it’s greater than 60% of the candle’s total range (high - low). A candle is considered bearish if its closing price is lower than its opening price.

3. Detecting Downtrend

downtrend = close < ta.sma(close, 20)

• This line defines a downtrend condition. It checks if the current closing price is below the 20-period Simple Moving Average (SMA) of the closing prices, which is commonly used to identify downtrends.

4. Criteria for the Candles

firstCandleBearish = isBearishLongBody(2)
secondCandleBearish = isBearishLongBody(1) and close[1] < close[2]
thirdCandleSmallBody = math.abs(close - open) < (high - low) * 0.3
thirdCandleGapDown = open < close[1]

• firstCandleBearish: Checks if the candle two periods ago was bearish with a long body.
• secondCandleBearish: Checks if the previous candle was bearish with a long body and closed lower than the candle before it.
• thirdCandleSmallBody: Checks if the current candle has a small body (less than 30% of its total range).
• thirdCandleGapDown: Checks if the current candle opened lower than the close of the previous candle.

5. Detecting the Pattern

bullishDeliberationPattern = downtrend and firstCandleBearish and secondCandleBearish and thirdCandleSmallBody and thirdCandleGapDown

• This line combines all the previously defined conditions to identify the Bullish Deliberation pattern.

6. Plotting the Pattern

if bullishDeliberationPattern
    label.new(bar_index[1], high[1], "Bullish Deliberation", color=color.green, textcolor=color.white, style=label.style_label_down, yloc=yloc.abovebar)

• This conditional statement checks if the Bullish Deliberation pattern is detected. If so, it plots a label on the chart.

Frequently Asked Questions

Conclusion

This script is designed to detect the Bullish Deliberation candlestick pattern, a potential signal for a bullish reversal during a downtrend. It functions by evaluating specific candlestick characteristics, such as body size and gap direction. The code, while proficient at pattern recognition, does not provide trading confirmation, necessitating additional analysis for reliable trading decisions. Moreover, it offers flexibility for customization across various timeframes by adjusting parameters like the Simple Moving Average (SMA) period. The label displayed on the chart helps traders quickly identify the presence of the Bullish Deliberation pattern, contributing to enhanced pattern recognition and potential trading opportunities.