Why the same hammer works at a tested support and fails in the middle of a range — and how to add the missing context.
Key takeaways
- A pattern's value depends entirely on where it forms.
- Combine patterns with level, trend and volume before acting.
- Backtest patterns on your own instrument before trusting a textbook statistic.
Candlestick patterns describe the balance between buyers and sellers within a period. A hammer at the low of a multi-week base after a volume spike is meaningful. The same hammer at the midpoint of a quiet range is noise with a name.
Add three filters before treating a pattern as tradeable: is it at a rule-defined level, is it aligned with the higher-timeframe trend, and did participation expand? Patterns that pass all three are far rarer and far better.
Beware imported statistics. Hit-rate tables from foreign markets and different eras rarely transfer to Nifty or MCX crude. If a pattern matters to your plan, measure it on your instrument and your timeframe.
Used properly, candles are a way of reading the current session's argument. They are not a prediction engine, and treating them as one is why so many chart-literate traders still lose money.
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