A Language for Financial Chart Patterns

In stock markets around the world, financial analysts continuously monitor and screen chart patterns (technical patterns) to predict future price trends. Although a plethora of methods have been proposed for classification of these patterns, there is no uniform standard in defining their shapes. To facilitate the classification and discovery of chart patterns in financial time series, we propose a novel domain-specific language called “Financial Chart Pattern Language” (FCPL). The proposed language is formally described in Extended Backus–Naur Form (EBNF). FCPL allows incremental composition of complex shapes from simple basic units called primitive shapes. Hence, patterns defined in FCPL can be reused for composing new chart patterns. FCPL separates the specification of a chart pattern from the mechanism of its implementation. Due to its simplicity, FCPL can be used by stock market experts and end users to describe the patterns without programming expertise. To highlight its capabilities, several representative financial chart patterns are defined in FCPL for illustration. In the experiments, we classify several representative chart patterns from the datasets of HANG SENG INDEX (HSI), NYSE AMEX COMPOSITE INDEX (NYSE), and Dow Jones Industrial Average (DJI).