Pattern recognition in Candlestick charts

Pattern recognition in Candlestick charts

Pattern recognition is a field within the area of “machine learning”.

Alternatively, it can be defined as “the act of taking in raw data and taking an action based on the category of the data”. As such, it is a collection of methods for “supervised learning”.

A complete pattern recognition system consists of a sensor that gathers the observations to be classified or described; a feature extraction mechanism that computes numeric or symbolic information from the observations; and a classification or description scheme that does the actual job of classifying or describing observations, relying on the extracted features.

In general, the market uses the following patterns in candlestick charts:

• Bullish patterns: hammer, inverted hammer, engulfing, harami, harami cross, doji star, piercing line, morning star, morning doji star.

• Bearish patterns: shooting star , hanging man, engulfing, harami, harami cross, doji star, dark cloud cover, evening star, evening doji star.