Pattern Blocks — “Recognize Market Structure”

Pattern Blocks allow a strategy to recognize recurring price formations. These patterns reflect collective trader psychology and are used to identify potential reversals, trend continuations, or market exhaustion.

Core Philosophy

Pattern blocks analyze raw OHLCV (Open, High, Low, Close, Volume) data across multiple timeframes to identify specific geometric or candlestick shapes.

Crucial Rule: Pattern blocks are Signal Generators, not decision-makers. They identify a setup, but a Logic Block must validate the signal before an order is executed.

1. What Pattern Blocks Do

• Pattern Identification: Scans for predefined candlestick (e.g., Hammer, Doji) or chart patterns (e.g., Head and Shoulders).
• Real-time Scanning: Monitors price action live or during historical backtesting.
• Boolean Output: Outputs a “True” signal the moment a pattern completes.
• Contextual Filtering: Works best when confirmed by volume or trend indicators.

2. When to Use Pattern Blocks

Pattern blocks are most effective when used for:

1. Spotting Reversals: Identifying when a trend is losing steam (e.g., a Double Top at a resistance level).
2. Confirming Breakouts: Ensuring a move out of a range has the structural “look” of a valid breakout.
3. Identifying Exhaustion: Detecting “climax” candles after an extended move.
4. Price-Action Confirmation: Adding a layer of “human” chart analysis to purely mathematical indicator strategies.