Understanding the CounterAttack

What is the CounterAttack?

The CounterAttack is a candlestick pattern that signifies a reversal of a prevailing trend. It is characterized by a significant reversal of price movement after an initial strong move in the opposite direction. The pattern includes a sequence of candles that show a dramatic shift in sentiment, often after a prolonged trend.

How is the CounterAttack Identified?

The CounterAttack pattern is identified by:

1. Pattern Formation:
   • Bullish CounterAttack: Typically follows a downtrend and involves a strong bullish reversal candle that counteracts the previous downtrend.
   • Bearish CounterAttack: Typically follows an uptrend and involves a strong bearish reversal candle that counteracts the previous uptrend.

When to Use the CounterAttack

The CounterAttack pattern is useful for:

• Reversal Scenarios: When it appears after a strong trend, it may indicate the start of a reversal.
• Trend Confirmation: Look for confirmation from additional technical indicators or subsequent candles to validate the reversal.

Formula Example

To identify the CounterAttack:

1. Identify the Initial Trend:
   • Bullish CounterAttack: Look for a strong bearish move followed by a significant bullish reversal candle that closes within the range of the previous bearish candle.
     • Condition: The bullish candle should have a large body and close above the midpoint of the bearish candle.
   • Bearish CounterAttack: Look for a strong bullish move followed by a significant bearish reversal candle that closes within the range of the previous bullish candle.
     • Condition: The bearish candle should have a large body and close below the midpoint of the bullish candle.

For instance, a bullish CounterAttack pattern may look like:

• Previous Downtrend: A series of bearish candles.
• Reversal Candle: The first candle of the pattern shows a strong bullish reversal that closes above the high of the previous bearish candle.

Parameters

The parameters for identifying the CounterAttack pattern include:

• Data: Defines the type of data to use for the pattern.

  • Value: ohlc
  • Description: The pattern uses Open, High, Low, and Close prices.

• Previous N Candles: Number of preceding candles to check.

  • Default Value: 1
  • Min Value: 1
  • Max Value: 300
  • Description: Checks for the CounterAttack pattern in the last N candles.

• Pattern Type: Specifies whether the pattern is bullish or bearish.

  • Default Value: :bullish
  • Options: :bullish, :bearish
  • Description: Determines the type of CounterAttack pattern to identify (bullish or bearish).

Conclusion

The CounterAttack candlestick pattern signals a potential reversal in the market trend, indicating a shift in sentiment. It is essential to use this pattern in conjunction with other technical indicators to confirm the reversal and assess its validity.