Condensed candlestick signatures

A compact signature for every bar

Each bar can be reduced to three range-normalized numbers: high-to-open, high-to-close, and open-to-low. Together they form a compact signature.

Those three numbers are expressed as fractions of average daily range and written in the form HO:HC:OL.

Count, mark, and store the signatures

A chart overlay can both tabulate the most common signatures on the series and mark bars that match a chosen signature.

The same encoding can be written to a file so later probability work is done on pattern counts rather than on drawn candles.

A related earlier coding scheme stored body and shadow traits as bits in a single number. This method instead maps each bar onto a small set of comparable signatures.

Rank frequent signatures, then review later price change

One implementation splits history into equal in-sample and out-of-sample halves, ranks the most frequent signatures on the first half, then applies those signatures on the second half.

The number of top signatures kept is a control. Using only the single most common signature makes the sample very selective, while a larger top set produces more observations.

A default test path holds each observation for one bar and exits at that bar's close, with hold length adjustable. Exploration tables can report how often each signature appears and the subsequent one-to-four-period price change associated with it.

Editorial. Pattern recognition can treat the first-half ranking as an explicit baseline. Price-change categorization can then attach the later price change. Candlestick patterns supply the bar condition being counted. These readings are TradersWeek interpretations of the historical workflow, not claims made by the archive.

Binned signatures or continuous ratios

Integer-binned signatures support frequency ranking, while unrounded high-open, high-close, and open-low ratios can be used as continuous inputs when grouping is not required.