This project applies the commonly used double top and Bottom chart pattern to the HK equity market. A web interface is provided for user to search for particular stock and check whether a double top or double bottom has occurred.
The data used in this project is provided by Qunadl. Quandl API is used to get the historical data of HK stocks in daily resolution.
A double top or double bottom is detected when two consecutive peaks/bottoms of approximately the same price on a price-versus-time chart of a market. The first peak/bottom has to have higher volume than the second one as a way of confirmation. A chart pattern detection library is used in this project, developed by Marcos Duarte, https://github.com/demotu/BMC. The library returns an array of the crest and trough of a wave which in this case is the tops and bottoms of a stock's price.
Since the data retrieved from Quandl includes lots of extra data which does not fit into the chart detection library, the data has to go through a few steps of reconstruction by utilising the Pandas framework. The data is then packed into a numpy array for pattern detection.
Signal is generated when double top or bottom is formed with a confirmation of certain candlestick patterns. This strategy simulates a long or short position right after the signal is generated. Success rate is then calculated by checking if the price breaks the support level in a 5-days period.
Finally the result is plotted out by using Matplotlib and the success rate is displayed. The crosses are points where double tops and bottoms occur.
