The Perfect Tool for Traders Who Want To:

• Identify high-probability setups with precision.
• Rely on automated chart analysis with easy-to-read visual feedback.
• Trade confidently with clear confirmation of bullish or bearish patterns.

The 3-Bar and 4-Bar Play Indicator is a powerful ThinkScript tool designed to simplify your analysis. By highlighting key stock patterns like ignitor, pause, and trigger bars, this tool provides clear visual cues for potential and confirmed setups, helping you trade with confidence and accuracy.

Understanding the 3 Bar Play Pattern

The 3 Bar Play is a trading strategy often used in short-term trading, applicable in both bullish and bearish trends. It provides traders with a clear pattern to identify potential trend reversals or continuations. While commonly called the 3 Bar Play, it can sometimes involve four or even five bars if the pattern remains intact and constructive.

Key Rules for Identifying the 3 Bar Play

Igniting Bar (First Bar):

• This is a wide-range, full-bodied candle that sets the tone, ideally with high volume. It acts as a signal of strength in the direction of the trend.
• For a bullish pattern, this bar should be a strong green candle, while in a bearish setup, it should be a wide red candle.
• The igniting bar should ideally set a new 20-day high (bullish) or 20-day low (bearish), with a range greater than the previous 14-day ATR (Average True Range).

Pullback Bar(s) (Second and Possibly Third Bar):

• These are narrow-range candles that create a temporary pause in momentum, providing an opportunity for a strategic entry.
• The high of the pullback bar(s) should remain at or below the high of the igniting bar, not exceeding a 50% retracement.

Trigger Bar (Third or Fourth Bar):

• The trigger bar, also known as the expansion candle, breaks out in the direction of the igniting bar.
• It should ideally be a full-bodied Marubozu candle that moves to new highs (bullish) or new lows (bearish).

Timeframes and Trend Confirmation

The 3 Bar Play works well on shorter timeframes, such as 1-minute or 5-minute charts, making it a popular choice for scalpers and day traders. For longer holds, consider confirming the pattern on higher timeframes, such as 15-minute or hourly charts. Use additional indicators, like the 8-day and 21-day Exponential Moving Averages (EMAs), to confirm the trend direction before entering. This is especially useful for distinguishing whether the pattern signals a trend continuation or reversal.

Applying the 3 Bar Play for Bullish and Bearish Patterns

Bullish 3 Bar Play:

This setup starts with a strong bullish igniting bar, followed by one or two resting candles, and finally, a breakout candle. Entry is taken on the breakout with a stop loss below the lowest pullback bar.

Bearish 3 Bar Play:

This setup starts with a strong red igniting candle, followed by narrow consolidation candles, and concludes with a breakout to new lows.