Equity Technical Analysis Pattern Recognition & Validation
Identify and validate technical chart patterns with rule-based frameworks for equity trades
What You Can Do
You can analyze equity charts to identify continuation patterns (flags, pennants, triangles), reversal patterns (head-and-shoulders, double tops/bottoms), and momentum breakouts using rule-based frameworks. Claude applies consistent validation criteria to assess pattern strength, calculate precise risk/reward ratios based on pattern geometry, and identify early invalidation signals that trigger stop-loss placement—transforming subjective chart reading into systematic, probability-weighted trading decisions.
Features
Categorize formations into continuation, reversal, and breakout families with specific candlestick and price-action criteria
Apply objective rules to confirm pattern completeness (proper legs, valid support/resistance touchpoints, volume confirmation)
Calculate entry levels, stop-loss placement, and profit targets based on pattern geometry and volatility measures
Cross-reference daily/weekly/intraday patterns to confirm setup strength and reduce false signals
Identify price levels and conditions that would negate the pattern thesis and trigger position exit
Systematize historical pattern analysis to build win-rate data and edge statistics on your specific watchlist
Assess breakout legitimacy by analyzing volume spikes at critical pattern levels
Create repeatable templates for sector-specific or volatility-profile patterns you trade most
Example Output
Example 1: Head-and-Shoulders Reversal Validation
Input: Daily chart of ABC equity with potential H&S formation
Output:
- Pattern Status: Valid bearish reversal (left shoulder low: $45.20, head low: $43.80, right shoulder low: $45.10)
- Neckline Support: $47.30 (minor resistance breakpoint)
- Entry Signal: Confirmed at $47.25 close (neckline break with volume spike +180%)
- Stop-Loss Level: $48.75 (1.5× shoulder width above neckline)
- Profit Target: $42.65 (neckline minus pattern height: $47.30 − $4.65 = $42.65)
- Risk/Reward Ratio: 1:2.1 (acceptable entry)
- Invalidation Signal: Close above $49.10 (negates pattern thesis)
Example 2: Flag Continuation Pattern Assessment
Input: 4H chart with bullish flag in uptrend
Output:
- Pattern Integrity: ✓ Valid (pole: $52.10–$61.40; flag parallel: $58.80–$56.20, 3 tests)
- Breakout Confirmation: Volume 140% above 20-day average at $58.95 resistance break
- Entry Zone: $59.10–$59.35 (pullback to upper flag boundary)
- Stop-Loss: $55.80 (below flag low, risk: $3.30)
- Target 1: $67.50 (pole height projected from breakout point)
- R:R Profile: 1:1.8 with high probability (86% historical success on watchlist)
- Time Decay Alert: 4 hours until 24H candle close—pattern invalidates if no breakout
What's Included
- SKILL.md instruction file with complete pattern taxonomy and validation rules:
- Pattern Validation Checklist: objective criteria for each pattern type (reversal, continuation, breakout)
- Risk/Reward Calculation Framework: templates for entry, stop, and target placement based on pattern geometry
- Multi-Timeframe Alignment Template: structured analysis for daily/weekly/4H pattern confirmation
- Invalidation Signal Reference: decision tree for pattern thesis breakdown and early exit conditions
- Backtesting Worksheet: format for logging pattern occurrences, outcomes, and win-rate statistics by pattern type
Who It's For
- Day Traders — Confirming intraday patterns (4H, 1H) before position entry in liquid equities
- Swing Traders — Validating daily/weekly patterns to hold multi-day positions with defined risk
- Technical Analysts — Building pattern libraries and backtesting historical setups to quantify edge
- Risk Managers — Defining stop-loss and position-sizing parameters using pattern-based geometry
- Equity Traders (All Strategies) — Reducing subjective chart reading with rule-based pattern confirmation frameworks
Best For
- Confirming trade setups before entry to reduce false signal execution
- Calculating precise stop-loss placement based on pattern invalidation levels
- Quantifying risk/reward ratios before committing capital to individual patterns
- Backtesting historical patterns to build win-rate statistics and trading edge
- Multi-timeframe pattern alignment to filter weaker setups in counter-trend conditions
- Building watchlist-specific pattern libraries (sector, market cap, volatility profile)
- Identifying early pattern breakdown signals to exit trades before major losses
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