How We Analyze Patterns
Most trading education tells you when patterns work. We start with when they fail — because avoiding bad trades matters more than finding good ones. Here is how we build our analysis, where our numbers come from, and what we deliberately leave out.
The Failure-First Approach
A Hammer candlestick has an overall success rate of roughly 42%. That means it fails more often than it works. Yet most education sites present it as a “bullish reversal signal” without context.
We flip that. Every pattern page on this site starts with “When It Fails” before showing “When It Works.” Not because we are pessimistic, but because understanding failure conditions is how you filter out the 58% of setups that lose money.
When you add context — location, market regime, volume — the same Hammer pattern jumps to 61% success at support. The pattern did not change. The context did. That is the core of our methodology: patterns are not signals. Context is the signal.
Where Our Data Comes From
Our pattern statistics are sourced from publicly available academic research and large-scale backtesting studies across multiple markets:
Academic Sources
- Thomas Bulkowski's Encyclopedia of Candlestick Charts (30,000+ pattern samples)
- Published backtesting studies across S&P 500, Forex pairs, and commodity markets
- Research papers on candlestick reliability in different market regimes
How We Process It
- Cross-reference success rates across multiple sources
- Break down by context: support vs resistance, trend direction, volume
- Calculate context-adjusted failure rates (not just raw averages)
- Update when new research becomes available
Every statistic on this site is sourced. Pattern detail pages include external references to the original research. We do not fabricate numbers or present backtests as guarantees.
The Three-Filter Framework
Every pattern analysis on this site passes through three filters before we present it. These are the same filters we teach users to apply:
Market Regime
Is the overall market bullish, bearish, or ranging? A reversal pattern in a strong trend has fundamentally different odds than one at a key turning point. We always specify the regime context.
Location
Where the pattern forms matters more than the pattern itself. A Hammer at support has 61% success. The same Hammer at resistance drops to 28%. We always break statistics down by location.
Order Flow (Volume)
Volume confirms conviction. A pattern formed on above-average volume signals real participation. Below-average volume suggests a pattern without substance. We include volume context in every analysis.
These are not our invention. They are well-established principles in technical analysis. Our contribution is applying them systematically to every pattern and making the context-adjusted statistics accessible.
What We Cover — And What We Do Not
What We Do
- Show when patterns fail and why
- Provide context-adjusted statistics
- Break down decision frameworks step by step
- Compare similar concepts side by side
- Link every claim to external sources
- Offer interactive education modules
- Provide free tools for trade analysis
What We Do Not Do
- Give trade signals or financial advice
- Promise specific win rates or returns
- Sell courses or paid subscriptions
- Present backtests as future guarantees
- Hide failure rates behind paywalls
- Use cherry-picked examples
How Content Is Created
Every piece of content on Candle Whisperer follows the same process:
- 1.Research: Start with published data. What do backtests say? What does the academic literature report? We do not start with opinions.
- 2.Context analysis: Break down the data by regime, location, and volume. Raw averages are misleading. Context-adjusted numbers tell the real story.
- 3.Failure analysis: Identify the specific conditions where the pattern breaks down. These become the “When It Fails” section that leads every pattern page.
- 4.Framework creation: Build actionable decision trees. Not “look for this pattern” but “if this context exists, then this pattern is relevant.”
- 5.Source linking: Every pattern page includes external references. If we cannot source a claim, we do not make it.
Limitations & Honest Disclaimers
Historical statistics are not predictions. A 61% success rate means 39% failure. Past performance across thousands of samples tells you the base rate — it does not guarantee the next trade.
Markets change. Statistics derived from 2000–2020 data may not perfectly reflect current market microstructure. We update our analysis when new research is available, but there is always a lag.
Context is subjective. Two traders can look at the same chart and disagree on whether a zone is support or resistance. Our frameworks reduce ambiguity but cannot eliminate it.
This is education, not advice. Candle Whisperer is an educational platform. We do not provide personalized financial advice, trade signals, or portfolio management. All trading involves risk of loss.