Real Kowledge of Chart Pattern

Key Principles for Chart Pattern Analysis
A. Trend Context

Patterns are more reliable when analyzed in the context of prevailing trends. For instance, reversal patterns in strong trends may fail without sufficient volume confirmation.

B. Volume Confirmation

Volume often provides confirmation for patterns:

Breakouts with high volume are more reliable.

Low volume breakouts can indicate false signals.

C. Time Frame

Patterns may appear differently across time frames. For example, a double top on a daily chart is more significant than one on a 5-minute chart due to higher trading participation and reduced noise.

D. Pattern Failure

Not all patterns result in expected outcomes. False breakouts or trend reversals can occur due to market news, unexpected events, or low liquidity. Risk management, stop-losses, and position sizing are crucial.