Candle Patterns

The Power of Context: Where Patterns Truly Work

Patterns are not standalone signals. Their effectiveness depends on context:

Trend Direction: Patterns aligned with the higher-timeframe trend have higher probability.

Support and Resistance: Patterns near key levels carry more weight.

Volume: Breakouts with volume confirm participation.

Market Structure: Higher highs and higher lows validate bullish patterns; lower highs and lower lows validate bearish ones.

A bullish engulfing in the middle of nowhere is noise. The same pattern at a weekly support level is opportunity.