Ultimate Pattern Scanner

Smart Pattern Scanner Pro - Complete Study Guide

The Smart Pattern Scanner Pro is an advanced candlestick pattern recognition indicator that automatically detects over 30 traditional Japanese candlestick patterns across multiple timeframes simultaneously. It combines pattern recognition with volume analysis and trend confirmation to provide traders with comprehensive reversal and continuation signals.
Core Features:
• 30+ Candlestick Patterns: Complete library of traditional patterns
• Multi-Timeframe Scanning: Simultaneous analysis across up to 7 timeframes
• Volume Integration: Buy/sell volume analysis with pattern confirmation
• Trend Filtering: SMA-based trend confirmation for pattern validity
• Real-Time Dashboard: Professional interface with customizable display
• Alert System: Automated notifications when patterns are detected
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Candlestick Pattern Categories
Reversal Patterns (Bullish)
Single Candle Patterns
1. Hammer
o Formation: Small body at top, long lower shadow (2x body size)
o Signal: Bullish reversal after downtrend
o Reliability: High when confirmed with volume
o Entry: Above hammer high with stop below low
2. Inverted Hammer
o Formation: Small body at bottom, long upper shadow
o Signal: Potential bullish reversal (needs confirmation)
o Reliability: Medium (requires next candle confirmation)
o Entry: Confirmed breakout above pattern
3. Dragonfly Doji
o Formation: Open = Close, long lower shadow, no upper shadow
o Signal: Strong bullish reversal signal
o Reliability: High in downtrends
o Entry: Above doji high with tight stop
4. Long Lower Shadow
o Formation: Lower shadow 2x body length
o Signal: Rejection of lower prices, bullish sentiment
o Reliability: Medium to high with volume
o Entry: Above candle high
Multi-Candle Patterns
1. Bullish Engulfing
o Formation: Large white candle completely engulfs previous black candle
o Signal: Strong bullish reversal
o Reliability: Very high with volume confirmation
o Entry: Above engulfing candle high
2. Morning Star
o Formation: 3-candle pattern (down, small, up)
o Signal: Major bullish reversal
o Reliability: Excellent (one of most reliable patterns)
o Entry: Above third candle high
3. Morning Doji Star
o Formation: Like Morning Star but middle candle is doji
o Signal: Strong bullish reversal
o Reliability: Very high
o Entry: Above third candle close
4. Piercing Pattern
o Formation: White candle opens below previous low, closes above midpoint
o Signal: Bullish reversal
o Reliability: High when closing >50% into previous candle
o Entry: Above piercing candle high
5. Bullish Harami
o Formation: Small white candle within previous large black candle
o Signal: Potential bullish reversal
o Reliability: Medium (needs confirmation)
o Entry: Above mother candle high
Reversal Patterns (Bearish)
Single Candle Patterns
1. Shooting Star
o Formation: Small body at bottom, long upper shadow
o Signal: Bearish reversal after uptrend
o Reliability: High with volume confirmation
o Entry: Below shooting star low
2. Hanging Man
o Formation: Like hammer but appears in uptrend
o Signal: Potential bearish reversal
o Reliability: Medium (needs confirmation)
o Entry: Below hanging man low
3. Gravestone Doji
o Formation: Open = Close, long upper shadow, no lower shadow
o Signal: Strong bearish reversal
o Reliability: High in uptrends
o Entry: Below doji low
4. Long Upper Shadow
o Formation: Upper shadow 2x body length
o Signal: Rejection of higher prices
o Reliability: Medium to high
o Entry: Below candle low
Multi-Candle Patterns
1. Bearish Engulfing
o Formation: Large black candle engulfs previous white candle
o Signal: Strong bearish reversal
o Reliability: Very high
o Entry: Below engulfing candle low
2. Evening Star
o Formation: 3-candle pattern (up, small, down)
o Signal: Major bearish reversal
o Reliability: Excellent
o Entry: Below third candle low
3. Dark Cloud Cover
o Formation: Black candle opens above previous high, closes below midpoint
o Signal: Bearish reversal
o Reliability: High when closing <50% into previous candle
o Entry: Below dark cloud low
Continuation Patterns
1. Rising Three Methods
o Formation: White candle, 3 small declining candles, white candle
o Signal: Bullish continuation
o Reliability: High in strong uptrends
2. Falling Three Methods
o Formation: Black candle, 3 small rising candles, black candle
o Signal: Bearish continuation
o Reliability: High in strong downtrends
Indecision Patterns
1. Doji
o Formation: Open = Close (or very close)
o Signal: Market indecision, potential reversal
o Reliability: Context-dependent
2. Spinning Tops
o Formation: Small body with upper and lower shadows
o Signal: Market indecision
o Reliability: Low without confirmation
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Multi-Timeframe Analysis
Timeframe Hierarchy Strategy
Primary Analysis Flow:
1. Higher Timeframe (Daily/Weekly): Establish overall trend direction
2. Intermediate Timeframe (4H/1H): Identify key support/resistance levels
3. Lower Timeframe (15M/5M): Precise entry and exit timing
Configuration Guidelines:
• Scalping: 1M, 3M, 5M, 15M, 30M
• Day Trading: 5M, 15M, 30M, 1H, 4H
• Swing Trading: 1H, 4H, 1D, 1W
• Position Trading: 4H, 1D, 1W, 1M
Pattern Confluence Rules:
1. High Probability Setup: Same pattern type appears on 3+ timeframes
2. Trend Alignment: Reversal patterns should align with higher timeframe structure
3. Volume Confirmation: Strong volume on pattern timeframe and higher timeframes
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Volume Analysis Integration
Volume Components:
1. Buy Volume: Volume when close > open (green candles)
2. Sell Volume: Volume when close ≤ open (red candles)
3. Volume Ratio: Current volume / 20-period moving average
4. Progress Indicator: Visual representation of volume strength
Volume Signal Interpretation:
• Ratio >1.5: Strong volume confirmation
• Ratio 1.0-1.5: Moderate volume support
• Ratio <1.0: Weak volume (pattern less reliable)
Volume Analysis Rules:
1. Bullish Patterns: Require strong buy volume for confirmation
2. Bearish Patterns: Require strong sell volume for confirmation
3. Volume Divergence: When pattern and volume disagree, favor volume
4. Volume Spikes: Ratios >2.0 indicate institutional interest
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Live Market Application
Step 1: Dashboard Setup
1. Position Selection: Choose optimal table position for your layout
2. Timeframe Configuration: Set relevant timeframes for your strategy
3. Volume Analysis: Enable for confirmation signals
4. Progress Indicators: Enable for visual signal strength
Step 2: Pattern Identification Process
Real-Time Scanning:
1. Monitor Multiple Timeframes: Check all configured timeframes simultaneously
2. Pattern Priority: Focus on patterns appearing on higher timeframes first
3. Signal Confluence: Look for patterns appearing across multiple timeframes
4. Volume Confirmation: Verify adequate volume support
Pattern Validation:
1. Trend Context: Ensure pattern aligns with overall market structure
2. Support/Resistance: Check if pattern forms at key levels
3. Market Conditions: Consider overall market volatility and sentiment
4. Time of Day: Be aware of session characteristics (open, close, lunch)
Step 3: Entry Decision Matrix
High Probability Entries:
• Pattern on 3+ timeframes
• Strong volume confirmation (ratio >1.5)
• Trend alignment with higher timeframes
• Formation at key support/resistance
Medium Probability Entries:
• Pattern on 2 timeframes
• Moderate volume (ratio 1.0-1.5)
• Partial trend alignment
• Formation in trending market
Low Probability Entries:
• Single timeframe pattern
• Weak volume (ratio <1.0)
• Counter-trend formation
• Choppy/sideways market
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Pattern Reliability Assessment
Tier 1 Patterns (Highest Reliability - 70-80% success rate):
• Morning Star / Evening Star
• Bullish/Bearish Engulfing
• Three White Soldiers / Three Black Crows
• Hammer (in strong downtrend)
• Shooting Star (in strong uptrend)
Tier 2 Patterns (High Reliability - 60-70% success rate):
• Piercing Pattern / Dark Cloud Cover
• Morning/Evening Doji Star
• Harami patterns
• Abandoned Baby
• Kicking patterns
Tier 3 Patterns (Moderate Reliability - 50-60% success rate):
• Doji patterns
• Tweezer Tops/Bottoms
• Window patterns
• Tasuki Gap patterns
• Marubozu patterns
Tier 4 Patterns (Lower Reliability - 40-50% success rate):
• Spinning Tops
• Long shadow patterns (single)
• Neutral doji formations
• Single candle continuation patterns
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Trading Strategies
Strategy 1: Multi-Timeframe Reversal
Objective: Catch major trend reversals using high-reliability patterns
Rules:
1. Wait for Tier 1 patterns on Daily + 4H timeframes
2. Require volume ratio >1.5 on both timeframes
3. Enter on 1H confirmation candle
4. Stop loss below/above pattern extreme
5. Target 2:1 or 3:1 risk-reward ratio
Strategy 2: Intraday Scalping
Objective: Quick profits from short-term pattern formations
Rules:
1. Focus on 5M and 15M timeframes
2. Trade only Tier 1 and Tier 2 patterns
3. Require volume confirmation
4. Quick exits (10-30 pip targets)
5. Tight stops (5-15 pips)
Strategy 3: Swing Trading
Objective: Multi-day position holding based on pattern signals
Rules:
1. Use Daily and Weekly timeframes
2. Focus on major reversal patterns
3. Combine with fundamental analysis
4. Wider stops (2-5% of entry price)
5. Hold for 5-20 trading days
Strategy 4: Trend Continuation
Objective: Enter trending markets using continuation patterns
Rules:
1. Identify strong trends on higher timeframes
2. Wait for continuation patterns on lower timeframes
3. Enter in direction of main trend
4. Trail stops using pattern lows/highs
5. Pyramid positions on additional patterns
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Risk Management
Position Sizing Rules:
1. Tier 1 Patterns: Risk up to 2% of account
2. Tier 2 Patterns: Risk up to 1.5% of account
3. Tier 3 Patterns: Risk up to 1% of account
4. Tier 4 Patterns: Risk up to 0.5% of account
Stop Loss Guidelines:
1. Reversal Patterns: Stop beyond pattern extreme + 1 ATR
2. Continuation Patterns: Stop at pattern invalidation level
3. Doji Patterns: Tight stops due to indecision nature
4. Multi-Candle Patterns: Use pattern range for stop placement
Take Profit Strategies:
1. Conservative: 1:1 risk-reward ratio
2. Moderate: 2:1 risk-reward ratio
3. Aggressive: 3:1 risk-reward ratio
4. Trailing: Move stops to breakeven after 1:1 achieved
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Limitations and Considerations
Technical Limitations:
1. Pattern Subjectivity: Slight variations in pattern interpretation
2. Market Context Dependency: Patterns perform differently in various market conditions
3. False Signals: Not all patterns lead to expected price moves
4. Lagging Nature: Patterns are confirmed after formation is complete
Market Condition Considerations:
1. Trending Markets: Continuation patterns more reliable than reversals
2. Range-Bound Markets: Reversal patterns at extremes more effective
3. High Volatility: Patterns may not develop properly
4. News Events: Fundamental factors can override technical patterns
Optimal Usage Conditions:
1. Liquid Markets: Adequate volume and participation
2. Normal Volatility: Not during extreme market stress
3. Clear Market Structure: Defined support and resistance levels
4. Multiple Timeframe Alignment: Confluence across timeframes
When NOT to Trade Patterns:
1. Major News Releases: Economic announcements can invalidate patterns
2. Market Holidays: Reduced participation affects reliability
3. Extreme Volatility: VIX >30 or similar stress indicators
4. Gap Openings: Large gaps can negate pattern significance
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Risk Disclaimer
CRITICAL WARNING FROM aiTrendview
TRADING FINANCIAL INSTRUMENTS INVOLVES SUBSTANTIAL RISK OF LOSS
This Smart Pattern Scanner Pro indicator ("the Indicator") is provided for educational and analytical purposes only. By using this indicator, you acknowledge and accept the following terms and conditions:
No Financial Advice
• NOT INVESTMENT ADVICE: This indicator does not constitute financial, investment, or trading advice
• NO RECOMMENDATIONS: Pattern signals are not recommendations to buy or sell any financial instrument
• EDUCATIONAL TOOL: Designed for learning technical analysis concepts and pattern recognition
• INDEPENDENT RESEARCH REQUIRED: Always conduct your own thorough analysis before making trading decisions
Substantial Trading Risks
• CAPITAL LOSS RISK: You may lose some or all of your trading capital
• LEVERAGE DANGERS: Margin trading can amplify losses beyond your initial investment
• MARKET VOLATILITY: Financial markets are inherently unpredictable and can move against any analysis
• PATTERN FAILURE: Candlestick patterns fail frequently and do not guarantee profitable outcomes
• FALSE SIGNALS: The indicator may generate incorrect or misleading signals
Technical Analysis Limitations
• NOT PREDICTIVE: Candlestick patterns analyze past price action, not future movements
• SUBJECTIVE INTERPRETATION: Pattern recognition can vary between traders and market conditions
• CONTEXT DEPENDENT: Patterns must be analyzed within broader market context
• NO GUARANTEE: No technical analysis method guarantees trading success
• STATISTICAL PROBABILITY: Even high-reliability patterns fail 20-30% of the time
User Responsibilities
• SOLE RESPONSIBILITY: You are entirely responsible for all trading decisions and outcomes
• RISK MANAGEMENT: Implement appropriate position sizing and stop-loss strategies
• PROFESSIONAL CONSULTATION: Seek advice from qualified financial professionals
• REGULATORY COMPLIANCE: Ensure compliance with local financial regulations
• CONTINUOUS EDUCATION: Maintain ongoing education in market analysis and risk management
Indicator Limitations
• SOFTWARE BUGS: Technical glitches or calculation errors may occur
• DATA DEPENDENCY: Relies on accurate price and volume data feeds
• PLATFORM LIMITATIONS: Subject to TradingView platform capabilities and restrictions
• VERSION UPDATES: Functionality may change with future updates
• COMPATIBILITY: May not work optimally with all chart configurations
Volume Analysis Limitations
• DATA ACCURACY: Volume data may be incomplete or delayed
• MARKET VARIATIONS: Volume patterns differ across markets and instruments
• INSTITUTIONAL ACTIVITY: Cannot guarantee detection of all institutional trading
• LIQUIDITY FACTORS: Low liquidity markets may produce unreliable volume signals
Multi-Timeframe Considerations
• CONFLICTING SIGNALS: Different timeframes may show contradictory patterns
• TIME SYNCHRONIZATION: Pattern timing may vary across timeframes
• COMPUTATIONAL LOAD: Multiple timeframe analysis may affect performance
• COMPLEXITY RISK: More data does not necessarily mean better decisions
Specific Trading Warnings
Pattern-Specific Risks:
1. Doji Patterns: Indicate indecision, not directional conviction
2. Single Candle Patterns: Generally less reliable than multi-candle formations
3. Continuation Patterns: May signal trend exhaustion rather than continuation
4. Gap Patterns: Subject to overnight and weekend gap risks
Market Condition Risks:
1. News Events: Fundamental factors can invalidate any technical pattern
2. Market Manipulation: Large players can create false pattern signals
3. Algorithmic Trading: High-frequency trading can distort traditional patterns
4. Market Crashes: Extreme events render technical analysis ineffective
Psychological Trading Risks:
1. Overconfidence: Successful patterns may lead to excessive risk-taking
2. Pattern Addiction: Over-reliance on patterns without broader analysis
3. Confirmation Bias: Seeing patterns that don't actually exist
4. Emotional Trading: Fear and greed can override pattern discipline
Legal and Regulatory Disclaimers
Intellectual Property:
• COPYRIGHT PROTECTION: This indicator is protected by copyright law
• AUTHORIZED USE ONLY: Use only as permitted by TradingView terms of service
• NO REDISTRIBUTION: Unauthorized copying or redistribution is prohibited
• MODIFICATION RESTRICTIONS: Code modifications may void any support or warranties
Regulatory Compliance:
• LOCAL LAWS: Ensure compliance with your jurisdiction's financial regulations
• LICENSING REQUIREMENTS: Some jurisdictions require licenses for trading or advisory activities
• TAX OBLIGATIONS: Trading profits/losses may have tax implications
• REPORTING REQUIREMENTS: Some jurisdictions require reporting of trading activities
Limitation of Liability:
• NO LIABILITY: aiTrendview accepts no liability for any losses, damages, or adverse outcomes
• INDIRECT DAMAGES: Not liable for consequential, incidental, or punitive damages
• MAXIMUM LIABILITY: Limited to amount paid for indicator access (if any)
• FORCE MAJEURE: Not responsible for events beyond reasonable control
Final Warnings and Recommendations
Before Using This Indicator:
1. DEMO TRADING: Practice extensively with paper trading before risking real money
2. EDUCATION: Thoroughly understand candlestick pattern theory and market dynamics
3. RISK ASSESSMENT: Honestly assess your risk tolerance and financial situation
4. PROFESSIONAL ADVICE: Consult with qualified financial advisors
5. START SMALL: Begin with minimal position sizes to test strategies
Red Flags - Do NOT Trade If:
• You cannot afford to lose the money you're risking
• You're experiencing financial stress or pressure
• You're trading emotionally or impulsively
• You don't understand the patterns or market mechanics
• You're using borrowed money or credit to trade
• You're treating trading as gambling rather than calculated risk-taking
Emergency Procedures:
• STOP TRADING immediately if experiencing significant losses
• SEEK HELP if trading is affecting your mental health or relationships
• REVIEW STRATEGY after any series of losses
• TAKE BREAKS from trading to maintain perspective
• PROFESSIONAL HELP: Contact financial counselors if needed
Acknowledgment Required
By using the Smart Pattern Scanner Pro indicator, you explicitly acknowledge that:
1. You have read and understood this entire disclaimer
2. You accept full responsibility for all trading decisions and outcomes
3. You understand the substantial risks involved in financial trading
4. You will not hold aiTrendview liable for any losses or damages
5. You will use this tool only for educational and personal analysis purposes
6. You will comply with all applicable laws and regulations
7. You will implement appropriate risk management practices
8. You understand that past performance does not predict future results
REMEMBER: The most important rule in trading is capital preservation. No pattern, indicator, or strategy is worth risking your financial well-being.
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Disclaimer from aiTrendview.com
The content provided in this blog post is for educational and training purposes only. It is not intended to be, and should not be construed as, financial, investment, or trading advice. All charting and technical analysis examples are for illustrative purposes. Trading and investing in financial markets involve substantial risk of loss and are not suitable for every individual. Before making any financial decisions, you should consult with a qualified financial professional to assess your personal financial situation.