Two-bar candlestick reversal as a timed construction

Three tests on the same bar

A long-side two-bar reversal can be defined by three OHLC tests on the same bar: a low below the prior low, a close above the prior close, and a close strictly below that bar's high. The last of those tests is the close-not-at-high filter.

Together the tests describe an engulfing-style reclaim. A lower low is followed by a close that recaptures the prior close, creating overlapping bodies. The construction uses the current bar and the prior bar together rather than a single-bar silhouette.

Confirmation lag

Pattern-occurrence counters in the constructions increment one bar after the three-part condition is true rather than on the formation bar. That confirmation lag is what later outcome tests treat as completion of the two-bar reversal.

Intra-pattern high and follow-through high

Comparing the high of the second bar of a two-bar reversal with the high of the first bar records intra-pattern structure, not whether the bar after the completed pattern extended higher.

The follow-through test used across the constructions asks whether the high of the bar after the completed reversal is greater than or equal to the high of the reversal bar. That later print is the follow-through high.

One-bar exit window

An unguarded exit attached to a reversal entry will apply on every later bar unless it is restricted to the first bar after entry. That restriction is the one-bar exit window.

Last bar and an unfilled next-bar limit

Detecting the last bar of a chart by comparing calendar dates fails on intraday series and is replaced in the constructions by a last-bar-of-chart check.

When the next-bar limit at the reversal high is not filled and a stop has not been hit, the constructions close the position on that next bar's close instead of remaining open.

A completed-bar entry

Because a bar's close is unknown until the bar ends, an entry specified at that close is a completed-bar rule and cannot be placed as a live end-of-session market order without an intraday proxy near the session close.

Marks, alerts, and scans

The same three-part OHLC predicate can mark bars on a chart, raise an alert, or filter a scan without attaching an order.

What the construction reports

Outcome reporting for the construction combines a pattern count, a total-bar count, and the share of patterns whose following bar makes a high at or above the prior high.