Price Action & Setups

A triangle describes converging price boundaries; a double or triple top describes repeated attempts near a high; a head-and-shoulders label describes a particular sequence of swings. These names summarize geometry. They do not establish a profitable trade by themselves.

Before using a pattern, record its timeframe, boundaries and completion rule. An unfinished right shoulder is still an unfinished shape. A doji means open and close are close together relative to the candle’s range; it does not tell you which side will win next.

Ask where the formation occurs and whether the proposed trade has space before the next opposing level. Waiting for a completed break can reduce ambiguity, but it can also worsen entry distance and still fail. Treat that trade-off as part of the rule rather than declaring all confirmation “safer.”

Worked example

Price compresses below 110 with lows at 104, 106 and 108. You define a breakout as a completed five-minute close above 110. A wick to 110.50 closing at 109.50 does not satisfy that rule. A close at 111 does, but you still need a feasible invalidation, size and exit.

Try it in replay

Find a completed and a failed example of the same pattern. Write your completion rule before revealing the future bars, and check both against it.

Check your reasoning

Use identical rules in both cases. A failed pattern does not become a different pattern merely because it lost. Record whether the trigger occurred and what the risk plan would have been.