@cmike444/supply-and-demand-zones/dist/lib/isValidBase.js

A library for identifying supply and demand zones in candlestick data.

"use strict";
Object.defineProperty(exports, "__esModule", { value: true });
exports.isValidBase = isValidBase;
const constants_1 = require("../constants");
/**
 * Validates that a base (a run of indecisive candles) is well-formed relative to
 * local volatility. Two checks are applied:
 *
 * 1. **Gap check** — rejects the base if any consecutive open-to-prior-close gap
 *    *between base candles* (base[0]→base[1], etc.) exceeds MAX_BASE_GAP_ATR_MULTIPLIER × ATR.
 *    The precedingCandle→base[0] transition is excluded because a gap entering the base
 *    from the explosive leg is valid (and often a strong zone signal).
 *
 * 2. **Height check** — rejects the base if its overall high-to-low range exceeds
 *    MAX_ZONE_ATR_MULTIPLIER × ATR.
 *
 * When `localATR` is zero or negative (e.g. insufficient data at the start of a series),
 * the checks are skipped and `true` is returned.
 *
 * @param baseCandles     - The indecisive candles that form the base.
 * @param precedingCandle - The candle immediately before the first base candle.
 * @param localATR        - ATR computed from the context window around the base.
 * @returns `true` if the base is valid, `false` if either check fails.
 */
function isValidBase(baseCandles, precedingCandle, localATR) {
    if (localATR <= 0)
        return true;
    // Gap check: scan gaps between base candles only (base[0]→base[1], etc.).
    // The precedingCandle→base[0] transition belongs to the explosive leg and is
    // intentionally excluded — a gap entering the base is valid as long as it
    // aligns with the preceding move (which the pattern detectors already validate).
    const sequence = [precedingCandle, ...baseCandles];
    for (let i = 2; i < sequence.length; i++) {
        if (Math.abs(sequence[i].open - sequence[i - 1].close) > constants_1.MAX_BASE_GAP_ATR_MULTIPLIER * localATR) {
            return false;
        }
    }
    // Height check: full high-to-low span of the base
    const maxHigh = Math.max(...baseCandles.map(c => c.high));
    const minLow = Math.min(...baseCandles.map(c => c.low));
    if (maxHigh - minLow > constants_1.MAX_ZONE_ATR_MULTIPLIER * localATR) {
        return false;
    }
    return true;
}