On Meta Trader 4 there is a pre-programmed indicator called the Market Facilitation Index. This takes gives 1 out of 4 different coloured bars after taking into account volumes and the index for each candlestick of the timeframe. The pre-programmed colours are...
MFI Up, Volume Up: green
MFI Down, Volume Up: brown
MFI Up, Volume Down: blue
MFI Down, Volume Up: pink
Change them to what I am calling traffic light signals, and assign the numbers 1 to red, 2 to yellow, 3 to green and 4 to grey.
MFI Up, Volume Up: RED = 1
MFI Down, Volume Up: YELLOW = 2
MFI Up, Volume Down: GREEN = 3
MFI Down, Volume Up: GREY = 4
Over the last 8 months of data on the H1 (1 hour) chart on XAUUSD (Gold) looking at the tops and bottoms of each move I discovered that when you took the preceding 2 candle stick readings and the inclusive one of the current candle to give you 3 bars on the MFI that certain combinations of colours were more likely to reverse at and some never reversed over the 8 months.
For example red-yellow-red would code for 1-2-1.
As there are 4 colours and 3 bars there are 4 to the power of 3 combinations... 64
23/ 64 codes never led to a reversal
21/ 64 codes only led to 1-2 reversals
13/ 64 codes led to 3-5 reversals *
6/ 64 codes led to 6-8 reversals *
1/64 codes led to 9 reversals single handedly *
103/130 of the 130 reversals in this 8 month period were caused by the leading 3 brackets of codes. (marked by *).
So 80% of the major reversals can be identified by 31% of the codes on a 1 hour chart.
After picking out one of these 3 colour signals when price makes a new high or low for a new move. The M30 (30 minute chart) should be looked at. After finding another one of these 3 colour signals on the M30 we then move down to the M15 repeat then M5 repeat and finally finish on the M1. As there are less frequent signals on the H1 due to being a higher time frame any of the codes that have caused a 3+ reversals using my analysis will be considered. On M15, M5 and M1 a code for 6+ reversals should be used.
This zooming in on the market can be seen in a typical example shown in the pictures attached.
********SO WHAT'S THE JOB?******
I need a program to work alongside Meta Trader 4 that can identify and record all the codes for tops and bottoms that can be applied to any chart. Whether it be M1, M5, M15, M30, H1, H4 or D1. XAUUSD, GBPUSD, OIL or any symbol on Meta trader 4.
This program must record the number of times a certain code led to a market reversal i.e. top or bottom on any time-frame.
Then all the data must be gathered to be put into Microsoft Excel or similar program so I have a copy and can analyze the data.
I only worked out the codes to 3 bars giving 64 combinations. Using 4 bars will give 256 combinations, 5 bars 1024 combinations, 6 bars 4096 combinations. I must be able to change the number of bars I want to calculate the data for.