212 Candle Pattern at Forex Factory

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212 Candle Pattern

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ReyesWhite
First Post: Nov 9, 2013 6:41am
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Post 1
| Joined Apr 2013 | Status: I like to be where the actions at | 158 Posts
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The 212 Candle Pattern is something i have come across recently. I'm sure there is other people who use the same formation,
but as far as i'm aware i'm the first person to actually publicly talk about it. The candle pattern aim is to predict the next bar,
not the next 2, 3 or 5 but only the next bar. This especially works well on the Hour 4 chart or Daily.
Aim: To predict the next bar
Success Rate: After backtesting (You can do this too) you will find a high ammount of probable trades. After i tested around
100 of these patterns it was successful at predicting the next bar 70% of the time.
Most traders try and make trading systems difficult, but in fact trading can be as simple as you make it.
The Name: The name of the pattern is basically what it says on the tin. 2 Bull or Bear candles followed by an opposite candle,
then followed by 2 more Bull or Bear candles depending whether you're buying or selling. For instance, in an up trend you
want to spot two bull candles followed by a bear candle followed by two more bull candles. After seeing this formation you can
be confident that the fifth candle will be bearish.
Attached Image
Here is another example of a trade.

Broker Specs
Attached Image
Why does this pattern work?

This pattern seems to work well as a pull back system. The candles show indecision in the market and a war between both
bulls and bears. A retracement already happened once after the first two candles and that's why we hope history will repeat its
self again.
Example of a bad trade:
Attached Image
http://www.forexfactory.com/showthread.php?t=456520
08:24 18/10/2015
Page 1 of 7
Another bad trade

Attached Image
Examples of Good trades which work well. To identify the trend try to use a 50 EMA or 20 EMA to filter the signals. Also
note that we're only predicting the next bar, not the next 3,4 or 5 bars. Don't be greedy.
Attached Image
08:24 18/10/2015
Page 2 of 7
Timeframe: H4, Daily, Weekly, Monthly

Stop / Take Profit: Haven't worked this out yet
BeginnerJoe
Nov 9, 2013 7:45am | Edited at 8:01am
Quote
Post 2
| Joined Nov 2013 | Status: Member | 612 Posts
If there are 4 green bars and 1 red bar, the bulls are charging. It would be suicidal to go stand in front of them. As shown by
the bad trade, you'd get flattened by the stampede.
Curve fitting historical bars that don't fight back is not much use. Magic pattens are best tested against a real money micro
account. That way you get to eliminate them quickly.
One thing worth noting is that the guy/entity taking the other side of your trade doesn't respect bars. Their only interest is to
buy low, and sell high. So pattern searching could be in vain because the future bars adapts to your current action. In other
words the bars yet to appear will often be contrary to your interest.
shellsnail
Nov 9, 2013 7:52am
Quote
Post 3
Quote
Post 4
Joined Aug 2012 | Status: Sentiment, trends, levels, tape | 1,674 Posts
A quick scan at weekly and monthly charts suggests that this works.
Forget about profits. Focus on expectancy.
FerruFx
Nov 9, 2013 8:31am

Joined May 2007 | Status: MT4 EAs/Indicators/Alerts coder | 4,710 Posts
Quoting BeginnerJoe
If there are 4 green bars and 1 red bar, the bulls are charging. It would be suicidal to go stand in front of them. As
shown by the bad trade, you'd get flattened by the stampede. Curve fitting historical bars that don't fight back is
not much use. Magic pattens are best tested against a real money micro account. That way you get to eliminate
them quickly. One thing worth noting is that the guy/entity taking the other side of your trade doesn't respect bars.
Their only interest is to buy low, and sell high. So pattern searching could be in vain...
To filter bad trades, instead of an entry right at the pattern close, I would enter if the following candle show momentum in the
right direction (entry at previous candle break).
MT4 EAs/Indicators/Alerts coder
08:24 18/10/2015
Page 3 of 7
BeginnerJoe
Nov 9, 2013 8:44am
Quote
Post 5
Quoting FerruFx
{quote} To filter bad trades, instead of an entry right at the pattern close, I would enter if the following candle show
momentum in the right direction (entry at previous candle break).
But by the time the momentum is certain, the move could be over. Filtering may not necessarily be better than following the
pattern blindly.
CHF/JPY currently has this 12121 pattern in the daily time frame. How many here would have dared to go counter trend right
at the bottom ? Short of complete beginners, I'd say none.
BeginnerJoe
Nov 9, 2013 8:58am
Quote
Post 6
Here could be an example of someone taken to the cleaners for doing 12121. Perhaps he would be saved if he did 12131. But
then the guy/entity on the other side of the trade might want to do silly buggers with the next bar.
Attached Image
Nov 9, 2013 9:43am
Rtm
Quote
Post 7
Joined Jan 2011 | Status: health ! | 3,102 Posts
I think this would be good for renko or range bars, just finding the right setting might need to based on the pair you are
watching % daily movement, because using defaults settings will just you a lot of bars that mean nothing in relation to this
strat.
iwjw
Nov 9, 2013 12:34pm | Edited Nov 10, 2013 3:44am added candle b4 pattern start
Quote
Post 8
Quote
Post 9
| Joined Mar 2011 | Status: Member | 350 Posts
Little help to find the pattern

edit:
modified version that checks the candle b4 pattern start
Attached File
_212_pattern.mq4
juicyt
1 KB | 1,500 download
Nov 9, 2013 6:12pm

| Commercial Member | Joined May 2008 | 406 Posts
I will check it out but thanks all the same. Keep in mind people you should be able to trade it with a pretty tight stop and
positive (maybe 2:1) Reward to risk. Accept the losses, nothing is 100%
jt
"Even if you fall down face first, you still went forward."
shovon21
Nov 9, 2013 6:35pm
Quote
Post 10
| Joined Oct 2013 | Status: Member | 6 Posts
Interesting. Not sure about spot forex but this strategy can be used in binary option trading.
08:24 18/10/2015
Page 4 of 7
Nov 9, 2013 6:51pm

FerruFx
Quote
Post 11
Quoting iwjw
Little help to find the pattern {file}

Great sharing. Thanks.
However you missed the fact that the first "2" of the pattern must be 2 and only 2 ... not 3-4 or whatever. That means that the
candle before the pattern start must be opposite.
You can see it explained in the bad examples pictures posted by the thread starter.
rtrs111
Nov 9, 2013 7:32pm
Quote
Post 12
70% winning rate of predicting the color of the next candle would be profitable only if you would've tested for a 1:1
risk/reward ratio (including commissions). If you decide to put your stop under the wick of the signal candle, for longs for
example, enter at the signal candle (bear) close and exit at the close of the bull candle, then RR will fluctuate. You have to
backtest fixed RRs or if you prefer instead to have variable stops (under/above the wicks) and exits at the close of the candle,
then you'll have to calculate the R-multiple.
r u ready?
abokwaik
Nov 10, 2013 1:58am
Quote
Post 13
Joined Sep 2012 | Status: 010101010101 | 1,630 Posts
Hi,
I've quickly made an EA to test the 212 pattern with different options.
I hope that this will be helpful in evaluating this method and probably enhance it.
I ran a test on E/U H4 for 2013 and it was profitable. Results attached.
Regards,
Abokwaik
Attached Image (click to enlarge)
Attached File
212_pattern_EA.mq4
4 KB | 707 downloads
Vision without action is a daydream. Action without vision is a nightmare
08:24 18/10/2015
Page 5 of 7
iwjw
Nov 10, 2013 3:45am | Edited at 5:11am corrected post#
Quote
Post 14
Quoting FerruFx
{quote} Great sharing. Thanks. However you missed the fact that the first "2" of the pattern must be 2 and only 2
... not 3-4 or whatever. That means that the candle before the pattern start must be opposite. You can see it
explained in the bad examples pictures posted by the thread starter.
update now availlable in post #8
ARTjoMS
Nov 10, 2013 4:25am
Quote
Post 15
Nov 10, 2013 4:46am
Quote
Post 16
Quote
Post 17
Quote
Post 18
Quote
Post 19
| Joined Sep 2012 | Status: Member | 128 Posts
This is not really a trading system.
FerruFx
Quoting ARTjoMS
This is not really a trading system.

This is a pattern like many other patterns. Just find out the best way to trade it ...
FerruFx
Nov 10, 2013 4:48am

Quoting iwjw
{quote} update now availlable in post #9

Post #8
Thanks.
iwjw
Nov 10, 2013 7:00am

if you trade the pattern only, I don't see it profitable

SL=TP=0 -> lifetime of the trade is one candle
otherwise until either sl or tp is hit
default lot is 0.01 so you may have to adjust to 0.1 or whatever if the account doesn't support micro
Attached File
_212_pattern_EA.mq4
Grill-Gite
6 KB | 418 downloads
Nov 10, 2013 11:52am

| Joined Jul 2013 | Status: Member | 5 Posts
Quoting BeginnerJoe
{quote} But by the time the momentum is certain, the move could be over. Filtering may not necessarily be better
than following the pattern blindly. CHF/JPY currently has this 12121 pattern in the daily time frame. How many here
would have dared to go counter trend right at the bottom ? Short of complete beginners, I'd say none.
I don't see where the CHY/JPY has the pattern in the daily chart. The past 6 bars are alternating red and green. No two bars in
a row there.
Grill-Gite
Nov 10, 2013 11:54am
Quote
Post 20
| Joined Jul 2013 | Status: Member | 5 Posts
Looks like the USD/CAD has this pattern today. I don't know if this is a good trade though with the US having a bank holiday.
Seems there have been some good news for the CAD recently and the chart shows a double top.
Any thought?
08:24 18/10/2015
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212 Candle Pattern

First Post: Nov 9, 2013 6:41am

Here is another example of a trade.

Why does this pattern work?

Another bad trade

Timeframe: H4, Daily, Weekly, Monthly

Nov 9, 2013 7:45am | Edited at 8:01am

| Joined Nov 2013 | Status: Member | 612 Posts

Nov 9, 2013 7:52am

Nov 9, 2013 8:31am

Nov 9, 2013 8:44am

| Joined Nov 2013 | Status: Member | 612 Posts

Nov 9, 2013 8:58am

| Joined Nov 2013 | Status: Member | 612 Posts

Nov 9, 2013 9:43am

Joined Jan 2011 | Status: health ! | 3,102 Posts

| Joined Mar 2011 | Status: Member | 350 Posts

Little help to find the pattern

Nov 9, 2013 6:12pm

Nov 9, 2013 6:35pm

| Joined Oct 2013 | Status: Member | 6 Posts

Nov 9, 2013 6:51pm

Little help to find the pattern {file}

Nov 9, 2013 7:32pm

| Joined Nov 2009 | Status: Member | 140 Posts

Nov 10, 2013 1:58am

Joined Sep 2012 | Status: 010101010101 | 1,630 Posts

Vision without action is a daydream. Action without vision is a nightmare

Nov 10, 2013 3:45am | Edited at 5:11am corrected post#

| Joined Mar 2011 | Status: Member | 350 Posts

Nov 10, 2013 4:25am

Nov 10, 2013 4:46am

| Joined Sep 2012 | Status: Member | 128 Posts

This is not really a trading system.

Joined May 2007 | Status: MT4 EAs/Indicators/Alerts coder | 4,710 Posts

This is not really a trading system.

Nov 10, 2013 4:48am

{quote} update now availlable in post #9

Nov 10, 2013 7:00am

if you trade the pattern only, I don't see it profitable

Nov 10, 2013 11:52am

Nov 10, 2013 11:54am

| Joined Jul 2013 | Status: Member | 5 Posts

Trading Systems / 212 Candle Pattern

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LOSSES CAN EXCEED YOUR DEPOSITS

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