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Do chart patterns have an edge?


Guest EA-trader

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Guest EA-trader

Chart patterns are like price action candles, they are historic data, these have no bearing on the outcome of the chart pattern.75% of chart patterns are likely to fizzle out within ranging markets, 25 % of them will work in trending markets, this is because market ranges 80% of the time.A chart pattern has to be useful, if price moves in the future, in the direction of the pattern.Unfortunately price moves (trends) only 20% of the time, so chart patterns in a ranging market have no edge,

 

On this chart, one can see as many failed ascending triangles, as successful ones.Within ranges there is no higher probability of success.

 

The people who know nowt will argue, the chart patterns work 80% of the time.

 

chart patterns.jpg

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Guest EA-trader

Here a chart pattern made 400 points on ftse, it was an ascending triangle.In the rectangle box they can fail a lot.Hindsight is everything.

 

ASCENDING.jpg

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  • 2 weeks later...
Guest EA-trader

Failure of chart patters.One ascending triangle failed already, will the next one fail?

 

Here come the quacks saying all chart patterns work.

 

failures of chart patterns.jpg

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