Project N.2—recognizing down sessions
After learning how to use a machine learning model to identify an up session, it is essential to analyze the other side of the coin, which is the more hidden and potentially riskier aspect – the short side. Our goal now will be to recognize a down session (see Figure 11.13).
In this section, we’re going to do the following:
- Select the target
- Select the features
- Perform the machine learning pipeline
Selecting the target
The objective of Project N.2 is to automatically recognize the down session (Figure 11.13) using the machine learning process we’ve explored so far:
Figure 11.13 – A down session
In Figure 11.13, you can see the target pattern down session for Project N.2. Forecasting a down session allows the trader to plan a risk-calculated short trade such as the following:
- Sell short at the bar close
- Place a stop loss above today’s...
