Market State & Candlestick Patterns Made in China

Indicator Overview
The Market State & Candlestick Patterns Master (MSCP-Master) is a comprehensive, all-in-one technical analysis indicator that combines real-time market state identification with multiple candlestick pattern recognition. This powerful tool not only identifies classic price action patterns but also adapts their significance based on the current market volatility environment, providing context-aware trading signals for smarter decision-making.

Core Innovation: Adaptive Pattern Recognition
Traditional candlestick pattern indicators work in isolation, often giving false signals in the wrong market conditions. MSCP-Master revolutionizes this approach by:

1. First assessing market state (Low Volatility/Ranging/High Volatility) through a multi-dimensional scoring system
   
3. Then applying different confirmation criteria for each pattern based on the detected market state
   
5. Finally providing context-aware signals that are more reliable because they consider the broader market environment
   

Three-Layer Analysis System

Layer 1: Market State Identification (The Foundation)
Uses four key metrics to calculate a comprehensive market state score:

• ATR Relative Volatility: Measures current volatility against historical norms
  
• Bollinger Band Width: Identifies contraction/expansion periods
  
• Amplitude Analysis: Evaluates recent price range activity
  
• Momentum Strength: Assesses directional movement power
  

Based on the composite score, the market is classified into:

• 🔵 Low Volatility: Tight ranges, potential for breakout
  
• 🟡 Ranging: Normal oscillation within established bounds
  
• 🟢 High Volatility: Wide ranges, strong momentum moves
  

Layer 2: Pattern Recognition With Context Adaptation
Each pattern uses different confirmation logic based on market state:

• High Volatility State: Uses SMA-based trend confirmation (Long/Short SMA comparison)
  
• Low Volatility/Ranging States: Uses ATR-adjusted threshold confirmation (dynamic based on current vs. baseline volatility)
  

This adaptive approach means patterns are only considered valid when they make sense for the current market environment.
Layer 3: Comprehensive Pattern Library
The indicator identifies 10+ critical candlestick patterns:

• Engulfing Patterns (Bullish/Bearish) with Harami confirmation requirement
  
• Outside Bars (Bullish/Bearish) with customizable engulfing criteria
  
• False Breakouts (Bullish/Bearish) with sophisticated tracking of "trap" moves
  
• Hammer/Inverted Hammer with ATR-adjusted significance thresholds
  
• Doji Variations (Standard, Dragonfly, Gravestone) with precise mathematical definitions
  
• Three Soldiers Method (Enhanced) with dual absolute/relative strength measurements
  

Enhanced Three Soldiers Method - Beyond Traditional Interpretation
Unlike traditional "Three White Soldiers/Black Crows" patterns that rely on simple visual recognition, our enhanced version introduces:

• Quantifiable Strength Metrics: Each candle must meet customizable thresholds for both absolute price movement (%) and relative efficiency (close-to-open vs. total range)
  
• Two Signal Types: Preparation signals (amber) for early warnings and True signals (green/red) for confirmed breakouts
  
• Breakout Confirmation: "True signals" only trigger when price breaks above/below recent signal cluster extremes
  
• Full Customization: All parameters adjustable to match your trading style and market conditions
  

Key Features

• 🎯 Context-Aware Signals: Patterns are validated differently in high vs. low volatility markets
  
• 📊 Real-Time Market State: Clear color-coded background shows current market conditions
  
• 🔍 Multiple Confirmation Methods: Uses both SMA trend-following and ATR-adjusted threshold approaches
  
• ⚙️ Fully Customizable: Every parameter adjustable across all pattern types and market state calculations
  
• 📈 Comprehensive Visualization: Color-coded labels, reference lines, and information tables
  

Strategic Application

• Preparation Signals: Use amber "single candle" or "three candle" signals to prepare for potential moves
  
• True Signals: Green/red "True" signals indicate confirmed momentum - ideal for main entries
  
• Market State Alignment: Trade with the market's character - aggressive in high volatility, cautious in low volatility
  
• Pattern Convergence: Look for multiple patterns confirming the same direction for higher probability setups
  

Parameter Groups (Organized for Easy Customization)

• Market State Identification: ATR, Bollinger Band, Amplitude, Momentum parameters
  
• Pattern-Specific Settings: Engulfing, Outside Bars, False Breakouts, Hammer/Doji patterns
  
• Three Soldiers Method: Absolute/Relative strength thresholds, lookback periods
  
• Confirmation Logic: SMA lengths, ATR adjustment factors, sensitivity settings