Ensign Software - DYO: Pesavento Patterns Buy/Sell Signal

Q: I want to use a DYO to implement the Hedge Fund Buy and Sell Signal. My first problem is to find the swing highs and swing lows. I am using the Pesavento Patterns. I see up and down arrows at the ends of the swings. Let’s assume a down arrow has formed; we are at a swing high. When a bar closes lower than the low of the high bar, a Hedge Fund Sell Signal has occurred. In the next chart, a Hedge Fund Sell Signal occurred two bars after the white down arrow. The long red bar closed below the low of the green bar with the white down arrow.

The Hedge Fund Buy Signal is exactly the opposite. First, an up arrow will occur. The Hedge Fund Buy Signal occurs when a bar closes above the high of the bar with a white up arrow. In this example, the Signal occurred three bars after the white up arrow.

I don’t know how many bars will be drawn before the Hedge Fund Signal occurs. I would also want only one Hedge Fund Signal after a white arrow. I am having difficulty "saving" the low (or high) of the bar that received a white arrow. Thank you very much for all your patient assistance.

Lines E, F and G can show just the bars that have the close below the Swing High bar's Low while the trend is still rising, however, there are cases where the reversal happens so dramatically that the Pesavento trend is no longer still rising. Therefore, the coloring on the chart in red is just showing all bar's whose close is below the last Swing High bar's Low.

Let me discuss the area marked by points 1, 2, 3 and 4 on the chart. Point 1 is a Swing High bar and it has the Green marker arrow on it. Two bars later the close is below the low of the swing high bar, and the red shading is appropriately shown and this arrow is pointed to my the big red arrow. Point 2 is a Swing Low bar at that point in time of evaluation and the chart starts back up to point 3. And the green shading shows the bars whose closes are above the high of the swing low bar at point 2. However, the Pesavento Patterns tool is NOT marking point 2 with a trend line and a swing marker, and this is because the swing to point 3 is too small. The trend resumes downward to point 4. With point 3 being a failed swing upward, point 4 becomes the new swing low for the trend that started at point 1.

So, the final trend is from point 1 to point 4, but at the time the move from point 2 to 3 was being drawn in real time, point 2 was being treated as a swing low, and you would have gotten a signal on the bar marked with the red arrow that is between point 2 and point 3. Only after the fact as the trend resumes lower is point 2 abandoned as being the swing low for the trend that started at point 1. When the Pesavento Patterns tool draws, it has the benefit of hind sight to see that point 4 is a better swing low then point 2, and draws the final trend line from 1 to 4. If the bars from 3 to 4 were deleted from the chart, the Pesavento Patterns tool would be showing a trend line drawn from 1 to 2, and that is why there is some green shading indicating the presence of your Buy signal at point 3.