maybe patterns have worked in the past. i cannot verify this. but markets have changed. electronic trading of most participants makes up a different market overall. there are more participants today and they are more hectic, resulting in more erratic markets. patterns and standard indicators are by far too simple to be able to give a realistic projection of the future.
It is people's aggregate faith in patterns that goes through ebbs and flows, determining whether the pattern should be faded or taken outright.
Once the majority have worked out which patterns to take and which to fade, those strategys will stop working and the opposite should be done.
OBSERVED GENERAL PRINCIPLE I observe futures and stock charts constantly, although I should do more camping. I trade futures with average daily volumes above 300,000 contracts, above 500,000 much better. On a macro basis, I have found more volume creates better decernable bar patterns for predicting direction. Also, it is not uncommon for trend beginnings and endings to be much clearer to decern and have great pattern formations than during the trend. This may be why so many traders don't see recognizable patterns during a trend or volume is too low for that particular sector/stock/future. I used to try to force trying to see a pattern when there just isn't one. A clear pattern eventually will occur. Its usually the market that is wishy washy and not you. Its so true that waiting is half the game of trading. Comments ?
the market does not work on patterns. It may look like its doing some head and armpits, but all its doing is testing a recent high but can't because no buyers are found. It works on price points.. I hope people understand that very important statement
i think you know my feelings on much of TA, but to play the devils advocate--- are not patterns simply the visual representation of price points? surfer
surfer, It may be a visual representation, but is it something that you can consistently trade off of? Seeing the pattern after it happens usually puts you in a delayed reaction. Knowing why its making this odd pattern(what price its testing) will put you ahead of the competition to entry where there is less noise/chop because few know whats happening unless you know what to look for at those certain price points. If you are entering at an obvious point, the market will definately test you to see if you are worthy to be there. I'll stop the gifts of experience here.