This is a trading item or a component that was created using QuantShare by one of our members.
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A trading rule has always two states. It could be TRUE, when its value is higher than 0 and FALSE otherwise.
An example of a simple trading rule is: stock close price is higher than its 30-Bar simple moving average. On one day, the close price is higher than its 30-Bar SMA and on another day it becomes lower than its 30-Bar SMA.
The current technical analysis indicator was created to detect a simple pattern. It detects changes in a trading rule state, where the change in state (True to False or False to True) occurred after a specific number of bars and within a maximum number of bars.
For example, let us say we want to create an indicator that gives us a bullish signal when:
Close price is higher than its 30-Bar simple moving average for at least 60 bars then it become lower than its 30-Bar SMA for at least 60 bars and finally it crosses again above the 30-Bar SMA.
To create this rule, you can use the PatternOC trading indicator:
patternOC(close > sma(30), 2, 60, 200) && close > sma(30)
In the PatternOC trading indicator, the first argument gets the trading rule and the second one gets the number of state changes (in this case 2). The third and forth arguments let you instruct the indicator to consider a state change only if the trading rule remains in that state for a minimum number of bars MIN (argument 3) and a maximum number of bars MAX (argument 4).
