New edge proposed: three_bar_inside_bar_breakout — E8 Intelligence Research

{ "name": "three_bar_inside_bar_breakout", "source": "Al Brooks, 'Reading Price Charts Bar by Bar'", "type": "entry_engine", "rule": "Enter long when the high of the current bar exceeds the high of the prior bar, provided the prior bar is an inside bar (its high is lower than the high of the bar before it and its low is higher than the low of the bar before it), and the prior bar's range is less than 1.5 times the average range of the last 20 bars.", "pseudocode": "for each bar i:\n if high[i-1] < high[i-2] and low[i-1] > low[i-2]:\n if range[i-1] < 1.5 * avg_range(20)[i-1]:\n if close[i] > high[i-1]:\n buy at market on close[i], stop loss at low[i-1] - 0.1*ATR", "why_it_works": "It captures a short-term consolidation (inside bar) that resolves in the direction of the breakout, a classic continuation pattern with defined risk." } Author: Andrew Stewart Caldin, Independent Researcher, UK. Part of the E8 Intelligence Research series. Platform: e8intelligence.com