Description
The Three Drives pattern is a classic six-point harmonic formation that signals market exhaustion and potential reversals. It is built around a series of three consecutive higher highs (in bearish setups) or lower lows (in bullish setups), where each leg completes around the 127% or 161.8% Fibonacci extension of the previous move. These patterns often appear near the end of extended trends, offering ideal conditions for reversals.
This indicator not only detects valid Three Drives patterns but also adds a Donchian breakout confirmation filter, meaning that a trading signal is only issued when the price breaks out in the expected direction—helping you avoid premature entries based on incomplete patterns. The result is a more practical, repaint-aware indicator with reliable trade signals and lower noise.
Pattern Detection and Behavior
- The indicator is evaluated on each bar (not tick-by-tick) to ensure consistent and performance-friendly operation.
- Since harmonic patterns can expand as price evolves, the final point (Drive 3) may repaint.
- However, the Donchian breakout alert is mostly non repainting.
- If a pattern exceeds your ratio constraints, it is considered invalid and removed.
- Patterns are rare; to increase coverage, load multiple instances of the indicator on your chart using different amplitude values.
Input Parameters
- Amplitude: Sets the scale of the patterns being scanned.
- Breakout Period: Determines how many bars to use for Donchian breakout confirmation.
- Max History Bars: Limits how far back the indicator looks when it loads.
- 1-2 and 3-2 Ratio Ranges: Customize the structure of the main drives.
- 0-A and A-B Ratio Ranges: Customize the retracement legs.
- Display Options: Toggle labels, ratios, and pattern lines.
- Colors and Styles: Adjust the appearance of pattern lines, labels, and ratio text.
- Alerts on Patterns: Enable notifications when a valid Three Drives structure forms.
- Alerts on Breakouts: Enable alerts when the price breaks out in the expected direction.
- Alert Types: Configure visual, sound, push, and email alerts.
How to Use It
- A blue pattern indicates a bullish setup (expecting upward reversal).
- A red pattern indicates a bearish setup (expecting downward reversal).
- Watch for Donchian breakouts after the pattern completes—these are your high-probability entry points.
- Combine with trend exhaustion indicators, divergence, or support/resistance for added confirmation.
Disclaimer
This indicator is a tool for technical analysis only and is designed to assist in chart interpretation. It does not constitute financial advice, investment recommendation, or any guarantee of results. Trading involves a high risk of loss and can result in the loss of your entire capital. Use this indicator at your own risk and only with money you can afford to lose. For complete details, please read our Terms and Conditions.
