Learn Best Price Action Patterns by Accuracy

Jan 17

https://www.tradingview.com/x/bFGyDxaQ/

Last year, I shared more than 1300 free signals and forecasts for Gold, Forex, Commodities and Indexes.

In my predictions, quite often I relied on classic price action patterns.

In this article, I will reveal the win rate of each pattern, the most accurate and the least accurate formations of the last year.

Please, note that all the predictions and forecasts that I shared this year are available on TradingView and you can back test any of the setup that I identified this year by your own. Just choose a relevant tag on my TradingView page.

Also, some forecasts & signals were based on a combination of multiple patterns.

Here is the list of the patterns that I personally trade:

🔘 Double Top or Bottom with Equal Highs



The pattern is considered to be valid when the highs or lows of the pattern are equal.
The pattern gives a bearish/bullish signal when its neckline is broken.

🔘 Double Top or Bottom with Lower High/Higher Low or Cup & Handle




The pattern is considered to be valid when the second top/bottom of the patterns is lower/higher than the first one.
The pattern gives a bearish/bullish signal when its neckline is broken.

🔘 Head & Shoulders and Inverted Head and Shoulders



The pattern gives a bearish/bullish signal when its neckline is broken.

🔘 Horizontal Range



The pattern is the extension of a classic double top/bottom with at least 3 equal highs/lows.
The pattern gives a bearish/bullish signal when its neckline is broken.

🔘 Bullish/Bearish Flag



The pattern represents a rising/falling parallel channel.
It gives a bullish/bearish signal when its upper/lower boundary is broken.

🔘 Rising/Falling Wedge Pattern



The pattern represents a contracting rising/falling channel.
It gives a bullish/bearish signal when its upper/lower boundary is broken.

🔘 Rising/Falling Expanding Wedge



The pattern represents an expanding rising/falling channel.
It gives a bullish/bearish signal when its upper/lower boundary is broken.

🔘 Descending/Ascending Triangle



The pattern is the extension of a cup & handle pattern with at least 2 lower highs/lows.
The pattern gives a bearish/bullish signal when its neckline is broken.

Please, also note that all the patterns that I identified and traded were formed on key horizontal or vertical structures.
Remember that the accuracy of any pattern drops dramatically if it is formed beyond key levels.

I consider the pattern to be a winning one if after a neckline breakout, it managed to reach the closest horizontal or vertical structure, not invalidating the pattern's highs/lows.



For example, if the price violated the high of the cup and handle pattern after its neckline breakout, such a pattern is losing one.

If it reached the closest structure without violation of the high, it is a winning pattern.

🔍 Double Top or Bottom with Equal Highs

I spotted 85 setups featuring these patterns.
Their accuracy is 62%.

🥉 Double Top or Bottom with Lower High/Higher Low or Cup & Handle

96 setups were spotted.
The performance turned out to be a little bit higher than a classic double top/bottom with 65% of the setups hitting the target.

🔍 Head & Shoulders and Inverted Head and Shoulders

58 formations spotted this year.
Average win rate is 64%

🏆 Horizontal Range

The most accurate pattern of this year.
More than 148 patterns were spotted and 74% among them gave accurate signal.

🔍 Bullish/Bearish Flag

38 setups identified this year.
The accuracy of the pattern is 57%

Rising/Falling Wedge

The pattern turned out to be a little bit more accurate.
Among 62 formations, 59% end up being profitable.

👎 Rising/Falling Expanding Wedge

The worst pattern of this year.
I recognized 24 patterns and their accuracy was just 51%.

🥈 Descending/Ascending Triangle

64 patterns were identified.
The win rate of the pattern is 66%.

The most important conclusion that we can make analyzing the performance of these patterns is that they all have an accuracy above 50%. If you properly combine these patterns with some other technical or fundamental tools, the accuracy of the setup will increase dramatically.

Good luck in your trading!

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