Swing Highs, Lows & Candle Patterns (SHLCP): Reading Market Structure

Overview

Swing Highs-Lows & Candle Patterns identifies the key structural turning points in price — the peaks and troughs that define the trend — and then layers in candle-pattern context directly on those pivots. It uses a pivot-length lookback to confirm that a candle is a genuine swing high or swing low (the price must be the highest or lowest point across a symmetric window on both sides), and then classifies whether that pivot continues the existing trend or begins to reverse it, labelling each as a Higher High (HH), Lower High (LH), Higher Low (HL), or Lower Low (LL). At the same time, the candle sitting at that pivot is checked against six classic reversal patterns.

On the SAHI chart it draws floating text labels directly above swing highs and below swing lows. Each label shows two lines of text: the structural label (HH / LH / HL / LL) on the first line and the candle-pattern name (or "None") on the second line. Hovering over a label pops up a tooltip that explains what that candle pattern means, making it easy to study patterns in context without leaving the chart.

How to Read the Indicator

Swing High Labels (red text, above the bar)

A label appears above a bar whenever the indicator confirms a swing high pivot — meaning price was higher at that bar than at the surrounding bars within the lookback window on both sides. The label text colour is red by default.

• HH (Higher High): this swing high is above the previous swing high. The uptrend structure is intact. Price is making progress to the upside.
• LH (Lower High): this swing high is below the previous swing high. Even if price is still going up locally, a LH signals that the upswing is losing strength — the market is failing to reach a new peak, a classic early warning of a trend change from up to down.

Swing Low Labels (teal text, below the bar)

A label appears below a bar whenever the indicator confirms a swing low pivot. The label text colour is teal by default.

• HL (Higher Low): this swing low is above the previous swing low. The uptrend structure is intact on the demand side — each pullback is shallower than the last.
• LL (Lower Low): this swing low is below the previous swing low. Sellers are pushing price further down on each pullback. In a downtrend, LL confirms continuation. After an uptrend, the first LL is a structural warning that the bullish structure has broken.

Candle Pattern Name (second line of the label)

Each swing pivot label shows a second line naming the candle pattern at that bar, or "None" if no recognised pattern is present. Six patterns are detected:

• Hammer — appears at a swing low. Small body, long lower wick, tiny upper wick. Shows buyers overwhelmed sellers by the close. Bullish signal when found at a HL or LL.
• Inverted Hammer — appears at a swing low. Small body, long upper wick, tiny lower wick. Buyers attempted a push upward; shows potential reversal appetite at the low.
• Bullish Engulfing — appears at a swing low. A green candle whose body fully wraps the prior red candle's body. Strong buyer commitment; the most emphatic of the three bullish patterns here.
• Hanging Man — appears at a swing high. Same shape as a hammer (long lower wick, small body) but found at a peak. The long lower wick shows sellers briefly took control intraday — a warning that bulls may be exhausted.
• Shooting Star — appears at a swing high. Small body, long upper wick, tiny lower wick. Buyers pushed price up sharply but sellers slammed it back by close. Bearish signal when found at a HH or LH.
• Bearish Engulfing — appears at a swing high. A red candle whose body fully wraps the prior green candle's body. The most emphatic of the three bearish patterns here; signals strong seller commitment at the top.

When the label shows "None," no pattern was triggered at that pivot — the structural label (HH / LH / HL / LL) is still valid and useful, but there is no candle-level confirmation to go with it.

Pattern Tooltips

Hovering over any label with a pattern name (not "None") shows a detailed tooltip explaining that pattern. These tooltips are built into the indicator — use them to learn pattern definitions directly on the chart without needing a separate reference.

Reading the Sequence Together

The real value of this indicator is in combining the structural label and the candle pattern together:

• A LH + Shooting Star at the same pivot is a dual-confirmation bearish signal: structure is weakening and price was rejected at that bar.
• A HL + Hammer is a dual-confirmation bullish signal: the pullback is shallower than the last, and buyers stepped in hard at the low.
• A LH with no pattern (None) is a structural warning only — weaker by itself; wait for the next pivot or an additional signal before acting.
• A HH with no pattern in a clean uptrend is simply trend confirmation — no reversal concern yet.

Always wait for the pivot bar to be confirmed: because the indicator uses a symmetric lookback window (equal bars on both sides of the pivot), a label will only appear once enough subsequent bars have formed. The signal prints "length" bars after the actual pivot candle.

Example Scenarios

Scenario 1 — HL + Hammer at a pullback, buy a CE (bullish)

Nifty has been trending up, printing HH and HL labels. It pulls back and at 24,860 the indicator plots a HL label with "Hammer" on the second line — the pullback stopped higher than the last swing low, and the candle at that pivot has a long lower wick, confirming buyers defended the level. The structural sequence (HH to HL) is intact.

• What you do: buy 1 lot of Nifty 25,000 CE at a premium of about ₹95.
• Stop loss: if the next swing low prints a LL (breaks below 24,860), the bullish structure is broken — exit. The premium would be around ₹58 there, so risk is roughly ₹37 per unit.
• Target: the previous HH near 25,080; the CE premium would be roughly ₹155 there.
• Why it works: you entered on a confirmed structural higher low with candle-level buying confirmation — two independent signals pointing the same way.

Scenario 2 — LH + Shooting Star at a rally, buy a PE (bearish)

Nifty has been weakening, already showing one LH. It bounces and the indicator plots a second LH label with "Shooting Star" at around 25,050 — the rally failed to reach the prior HH, and the candle shows buyers were rejected by the close. The structure is now HH to LH to LH, confirming the downtrend is establishing.

• What you do: buy 1 lot of Nifty 25,000 PE at a premium of about ₹105.
• Stop loss: if a subsequent pivot prints a HH (breaks above 25,050), the bearish thesis is wrong — exit. The premium would be around ₹65 there.
• Target: the previous swing low near 24,880; the PE premium would be roughly ₹165 there.
• Why it works: the structural sequence confirms a lower-high trend, and the Shooting Star adds candle-level rejection evidence at exactly that pivot.

Scenario 3 — What to avoid

• Do not act on a label before it is fully confirmed. Labels appear "length" bars after the actual pivot candle — by then the bar is already closed and confirmed. Never try to anticipate a label forming; trade only what is already printed.
• Do not trade a pattern label in isolation without the structural context. A Hammer on a LL is a reversal signal; a Hammer on a HL is continuation. The same shape at a HH (Hanging Man) is bearish. Always read the first line (HH/LH/HL/LL) before acting on the second line.
• Avoid treating "None" pivots as lower-quality. "None" simply means no recognised candle pattern was present — the structural label is still fully valid. Many strong trend-continuation trades come from clean HL or LH pivots with no pattern.
• Do not counter-trade a clean trend just because one adverse pattern appears. A single LH in an otherwise strong uptrend (all HH/HL sequence) is a flag, not a confirmed reversal. Wait for a sequence — a LH followed by a LL — before reversing your directional bias.
• Be cautious in choppy, rangebound markets. When Nifty is oscillating without progress, HH and LL labels alternate rapidly without a clear trend sequence. The indicator works best when price has a directional bias and the HH/HL or LH/LL sequence is consistent.

Settings Panel Guide

Swing Detection

• length (no group label): the pivot lookback — how many bars on each side of a candle must be lower (for a high) or higher (for a low) to confirm a swing pivot. Default is 21. A larger value finds fewer, more significant swing points; a smaller value finds more pivots but some will be minor noise. For Nifty / BankNifty on a 15-minute chart, 21 is a good balance. On a 5-minute chart, reduce to 10–13 to keep pivots meaningful.

Style

• Swing High (colour swatch): colour of all swing-high labels and their text. Default is red. Cosmetic only.
• Swing Low (colour swatch): colour of all swing-low labels and their text. Default is teal. Cosmetic only.