TreeCandlePattern-Fusimetria

A Powerful 3-Candle Reversal Pattern Inspired by Smart Money Principles


How to Use the Indicator Effectively

This pattern works exceptionally well across higher timeframes (H4, Daily, Weekly) where institutional traders operate, often appearing at key turning points in the market.

Key Settings
[/b
]Best Timeframes: H1 for intraday trades, H4/Daily for swing positions

Customisation Options: Adjust arrow colours (green for bullish, red for bearish) and size for better visibility

Alerts: Set notifications for when new signals appear to catch reversals early

The indicator automatically marks:
🔺 Bullish reversals (when price breaks under previous lows then surges back up)
🔻 Bearish reversals (when price spikes above prior highs then collapses)

The Trading Philosophy Behind the Pattern

This setup is remarkably similar to the classic "Power of Three" reversal structure, where:

The First Candle shows the final push of the current trend (either greed in an uptrend or fear in a downtrend)

The Second Candle traps retail traders by creating false breakouts (where smart money accumulates or distributes)

The Third Candle confirms the reversal by closing beyond the extreme of the second candle

Why This Works Like Smart Money Trading

Institutional traders often use these false breakouts to enter positions against the crowd

The third candle's close beyond the extreme shows absorption of liquidity (stops being taken out before reversal)

Works particularly well near key support/resistance levels where banks and hedge funds place their orders

Advanced Confirmation Techniques

To filter out false signals and trade like the professionals:

Volume Analysis
Look for higher volume on the second candle (shows strong institutional interest)

The third candle should ideally have lower volume as retail traders get trapped

Price Action Context
Works best after strong trends (not in ranging markets)

Combine with Fibonacci levels (61.8% retracements often see reversals)

Watch for wick rejections on the third candle (shows failure of breakout)

Example: Bitcoin (BTC/USDT) Daily Chart
![BTC Example]

After a long uptrend, price makes a false breakout above resistance (second candle)

The next candle closes below the second candle's low, confirming reversal

This was followed by a 30% drop as smart money exited longs

When to Enter & Exit Trades
✅ Entry: At the open of the fourth candle after confirmation
✅ Stop Loss: Just beyond the extreme of the second candle
✅ Take Profit: At nearest support/resistance level or using 1:2 risk-reward

⚠️ Avoid This Pattern In:

Choppy, sideways markets

During major news events when price action becomes erratic