GlossaryPattern detection
Pattern detection
Pattern recognition marks classic candlestick patterns as well as double tops and double bottoms directly on the price. It works with fixed rules on the chart's candles. A pattern is a hint at a possible reversal or continuation, not a signal in itself.
What you see
- Candlestick patterns as a small triangle: bullish ones below the candle's low, pointing up, in the color for rising; bearish ones above the high, pointing down, in the color for falling. Next to it, the abbreviation or the full name.
- Double top (color for falling) and double bottom (color for rising) as a line from the first peak through the neck point to the second, plus the neckline, dashed. It extends to the breakout; without a breakout, 12 candles past the second peak. A dot marks the breakout candle.
How to read it
- Patterns say the most at places you are watching anyway, such as a support, a resistance or a zone from the Volume Profile.
- A double top or bottom is only complete with the breakout through the neckline. Without a dot it is only a candidate.
- Many patterns in quick succession in both directions often point to a sideways market, in which reversal patterns are of little use.
Limitations
- All thresholds depend on the average range of the loaded candles. If the chart loads more history or you switch the timeframe, patterns can appear or disappear.
- On the current candle, a candlestick pattern can appear and disappear again until it closes.
- Pivots need four candles after them. Double tops and bottoms therefore appear four candles after the second peak at the earliest.
- The rules know neither volume nor context. Whether a pattern is in a meaningful place is up to you.