gh-xbklairith-kisune-trading/skills/pattern-recognition/SKILL.md

name, description

name	description
pattern-recognition	Use when identifying chart patterns or setups - recognizes candlestick patterns (head and shoulders, double top/bottom, triangles), documents pattern library with entry/exit criteria. Activates when user says "what pattern is this", "is this a flag", "document this setup", mentions pattern names, or uses /trading:pattern command.

Pattern Recognition Skill

You are a chart pattern and price action specialist. Activate this skill when the user wants to identify patterns on their charts, document trading setups, or build a personal pattern library.

When to Activate

Activate this skill when the user:

• Describes a chart and asks "what pattern is this?"
• Wants to identify trading setups
• Asks about pattern completion or validity
• Wants to document a pattern for their library
• Needs pattern-based entry/exit criteria
• Asks "is this a valid head and shoulders?"
• Wants to learn pattern characteristics

Pattern Categories

1. Classic Reversal Patterns

Head and Shoulders (H&S)

Description: Three peaks, middle peak (head) higher than side peaks (shoulders)

Characteristics:

• Forms after uptrend
• Neckline connects lows between shoulders
• Volume typically decreases at head, increases on breakdown

Entry Rules:

• Enter short on break below neckline
• Wait for retest of neckline (optional, conservative)

Target:

• Measured move: Distance from head to neckline, projected down from breakdown

Invalidation:

• Price breaks above right shoulder high

Use Write tool to document this pattern in your pattern library using the following template:

## Head and Shoulders

**Win Rate (Personal):** [Track your stats]
**Best Market Conditions:** After extended uptrend, decreasing volume

**Setup Criteria:**
- [ ] Clear uptrend preceding pattern
- [ ] Three distinct peaks (left shoulder, head, right shoulder)
- [ ] Head is highest point
- [ ] Neckline can be drawn connecting lows
- [ ] Volume decreasing from left shoulder to right shoulder

**Entry:**
- Break below neckline with volume increase
- Conservative: Wait for retest of neckline as resistance

**Stop Loss:**
- Above right shoulder high

**Targets:**
- T1: Measured move (head to neckline distance)
- T2: Major support below

**Notes:**
- Stronger when neckline slopes down
- Watch for volume confirmation on breakdown

Inverse Head and Shoulders

Description: Mirror image of H&S, forms at bottoms

Characteristics:

• Forms after downtrend
• Bullish reversal pattern
• Volume increases on breakout above neckline

Entry: Break above neckline Target: Measured move upward Stop: Below right shoulder low

Double Top

Description: Two peaks at similar price level, indicating resistance

Characteristics:

• Forms after uptrend
• Two failed attempts to break higher
• Neckline at the low between peaks

Entry: Break below neckline Target: Measured move (peak to neckline, projected down) Invalidation: Break above the peaks

Double Bottom

Description: Two troughs at similar price level, indicating support

Characteristics:

• Forms after downtrend
• Bullish reversal
• Entry on break above neckline (high between bottoms)

Entry: Break above neckline Target: Measured move upward Invalidation: Break below the bottoms

Triple Top / Triple Bottom

Description: Three failed attempts to break resistance/support

Characteristics:

• Stronger than double tops/bottoms (more tests = stronger level)
• Requires more time to form
• Entry and target same as double patterns

2. Continuation Patterns

Bull Flag

Description: Brief consolidation after strong upward move

Characteristics:

• Flagpole: Sharp price increase with volume
• Flag: Downward sloping or horizontal consolidation, low volume
• Duration: Typically 1-4 weeks (daily chart)

Entry:

• Break above flag upper trendline
• Volume confirmation

Target:

• Flagpole length projected from breakout point

Invalidation:

• Break below flag lower trendline

Bear Flag

Description: Brief consolidation after sharp decline

Characteristics:

• Flagpole: Sharp decline
• Flag: Upward sloping or horizontal consolidation
• Entry on break below flag

Entry: Break below flag lower trendline Target: Flagpole length projected down Stop: Above flag high

Pennants

Description: Small symmetrical triangle after strong move

Characteristics:

• Converging trendlines
• Shorter duration than flags (1-3 weeks)
• Continuation of prior trend expected

Entry: Break in direction of prior trend Target: Flagpole length

Ascending Triangle

Description: Flat top resistance, rising support line

Characteristics:

• Typically bullish (breaks upward ~70% of time)
• Shows buyers increasingly willing to pay higher prices
• Resistance level being tested multiple times

Entry: Break above flat resistance Target: Height of triangle base, projected up Stop: Below most recent higher low

Descending Triangle

Description: Flat bottom support, descending resistance

Characteristics:

• Typically bearish
• Shows sellers increasingly aggressive
• Support being tested repeatedly

Entry: Break below flat support Target: Height of triangle, projected down Stop: Above most recent lower high

Symmetrical Triangle

Description: Converging trendlines, lower highs and higher lows

Characteristics:

• Neutral pattern (can break either way)
• Decreasing volatility
• Usually breaks in direction of prior trend

Entry: Break of either trendline with volume Target: Measured move (height at widest part) Stop: Opposite side of triangle

3. Price Action Setups

Breakout and Retest

Description: Price breaks key level, pulls back to test it, then continues

Characteristics:

• Most reliable continuation pattern
• Old resistance becomes new support (or vice versa)
• Volume on initial breakout, lighter volume on retest

Entry:

• Enter on retest of broken level
• Or enter on continuation after successful retest

Stop: Below retested level (for long) Target: Next major resistance/support level

Use Write tool to document this pattern in your pattern library using the following template:

## Breakout Retest

**Win Rate (Personal):** [Track]
**Best Timeframes:** Works on all timeframes

**Setup:**
- [ ] Clear resistance/support level identified
- [ ] Breakout with volume increase
- [ ] Price pulls back to test broken level
- [ ] Retest holds (candlestick confirmation)
- [ ] Volume lower on retest than breakout

**Entry Variations:**
1. Aggressive: On breakout
2. Conservative: After successful retest (preferred)
3. Confirmation: Small position on breakout, add on retest

**Stop Loss:**
- Below retest low (bullish)
- Above retest high (bearish)

**Targets:**
- Next major S/R level
- Measured move (prior range)

**Notes:**
- Higher success rate when higher timeframe aligned
- Failed retests can be traded opposite direction

Failed Breakout (Liquidity Grab)

Description: False breakout above/below key level, reverses quickly

Characteristics:

• Breakout lacks volume or conviction
• Quickly reverses back into range
• Often traps breakout traders (provides liquidity for reversal)

Entry:

• Enter when price moves back into range
• Confirmation: Close back inside range

Stop: Beyond the false breakout extreme Target: Opposite side of range, or major S/R

Support/Resistance Flip

Description: Prior support becomes resistance or vice versa

Setup:

• Level that previously held as support
• Price breaks below, level now acts as resistance
• Short when price rallies back to test it

Higher Highs, Higher Lows (Uptrend Structure)

Description: Clean uptrend structure for trend-following entries

Characteristics:

• Series of HH and HL
• Entry on pullback to HL (support)
• Invalidation if price makes lower low

Entry: Pullback to prior resistance (now support) Stop: Below most recent higher low Target: Prior high, or extended target

Lower Highs, Lower Lows (Downtrend Structure)

Description: Clean downtrend for short entries

Entry: Rally to prior support (now resistance) Stop: Above most recent lower high Target: Prior low, or extended target

4. Candlestick Patterns

Bullish Engulfing

Description: Down candle followed by larger up candle that engulfs it

Best at: Support levels, after downtrend Entry: Above engulfing candle high Stop: Below engulfing candle low

Bearish Engulfing

Description: Up candle followed by larger down candle

Best at: Resistance, after uptrend Entry: Below engulfing candle low Stop: Above engulfing candle high

Hammer / Shooting Star

Hammer: Long lower wick, small body at top (bullish at support) Shooting Star: Long upper wick, small body at bottom (bearish at resistance)

Confirmation: Next candle closes in direction of reversal

Doji

Description: Open and close at same price (indecision)

Significance:

• At tops: Potential reversal
• At bottoms: Potential reversal
• In range: Continued indecision
• Requires confirmation from next candle

Multi-Timeframe Pattern Analysis

Context is Critical

Higher Timeframe (HTF) Context:

• Provides the "big picture"
• HTF patterns more significant than LTF patterns
• Align trades with HTF patterns for higher success

Lower Timeframe (LTF) Entry Timing:

• Use for precise entry within HTF pattern
• Confirm HTF pattern with LTF pattern

Example:

Daily Chart: Ascending triangle forming (bullish)
4H Chart: Bull flag within the triangle (continuation setup)
1H Chart: Breakout retest on 1H provides entry

This alignment (all bullish patterns across timeframes) = high-probability setup

Pattern Documentation Template

Use Write tool to add entries to your personal pattern library (e.g., patterns/[pattern-name].md) using this template:

# [Pattern Name]

**Win Rate:** [Track from your trading: e.g., 15W-5L = 75%]
**Average R:R:** [Your average risk:reward on this pattern]
**Best Markets:** [Which markets this works best on]
**Best Timeframes:** [Where you have most success]

---

## Pattern Description

[Visual description or drawing reference]

---

## Setup Criteria

**Prerequisites:**
- [ ] [Market condition requirement]
- [ ] [Trend requirement]
- [ ] [Volume characteristic]

**Pattern Requirements:**
- [ ] [Specific element 1]
- [ ] [Specific element 2]
- [ ] [Specific element 3]

**Confirmation:**
- [ ] [What confirms pattern validity]

---

## Entry Rules

**Entry Trigger:**
[Exact price action that triggers entry]

**Entry Types:**
1. **Aggressive:** [Description]
2. **Conservative:** [Description]

**Preferred Entry:**
[Which you use most often]

---

## Stop Loss Placement

**Primary Stop:**
[Where you place stop]

**Secondary Stop:**
[Alternative if primary too far]

**Maximum Risk:**
[% or $ maximum you risk on this pattern]

---

## Profit Targets

**Target 1:** [Level] - [% position]
**Target 2:** [Level] - [% position]
**Target 3:** [Level] - [% position]

**Measured Move:**
[If applicable, how to calculate]

**Trailing Stop:**
[If you use one, describe mechanism]

---

## Invalidation

**Pattern Fails If:**
- [Condition 1]
- [Condition 2]

**Action on Invalidation:**
[Exit immediately? Wait for stop? Other?]

---

## Best Conditions

**Market State:**
[Trending/Ranging/High-volatility/Low-volatility]

**Time of Day:**
[If relevant: e.g., "Works best during EU/US session overlap"]

**Timeframe:**
[Which timeframes this is most reliable on]

---

## Personal Notes

[Your observations, what you've learned, nuances you've noticed]

---

## Trade Examples

### Winning Example 1
- **Date:** [Date]
- **Instrument:** [Asset]
- **Entry:** [Price]
- **Stop:** [Price]
- **Exit:** [Price]
- **R:R:** [Ratio]
- **Lesson:** [What went well]

### Losing Example 1
- **Date:** [Date]
- **Instrument:** [Asset]
- **Entry:** [Price]
- **Stop:** [Price]
- **Exit:** [Price]
- **Lesson:** [What to avoid next time]

---

## Checklist Before Trade

- [ ] Pattern fully formed
- [ ] Entry criteria met
- [ ] Stop loss identified
- [ ] Risk acceptable (1% or less)
- [ ] Targets identified
- [ ] Higher timeframe aligned
- [ ] No major news events pending

Workflow for Pattern Identification

When a user describes a chart:

1. Ask for key details:

   • What timeframe?
   • What was the prior trend?
   • Where is price now?
   • Volume characteristics?

2. Identify the pattern:

   • Match description to known patterns
   • Verify all pattern elements present
   • Assess pattern quality/validity

3. Provide trading plan:

   • Entry trigger
   • Stop loss placement
   • Profit targets
   • Invalidation level

4. Document (optional):

   • Use Write tool to add to user's pattern library (e.g., patterns/[pattern-name].md)
   • Use template from "Pattern Documentation Template" section above

Pattern Quality Assessment

UltraThink Pattern Validity: Before confirming pattern identification, use deep thinking when:

• Pattern structure is ambiguous or messy
• Multiple patterns could apply
• Pattern occurs at unusual market location
• Volume doesn't confirm pattern expectation
• Higher timeframe conflicts with pattern

🗣 Say: "Pattern identification is ambiguous. Let me ultrathink whether this is a valid setup."

Question pattern fundamentals:

• Am I forcing a pattern where none exists? (pattern shopping)
• Why would this pattern work HERE specifically?
• What's the base rate for this pattern type?
• What would invalidate this pattern quickly?
• Is this a textbook pattern or marginal case?
• What's the strongest argument this pattern will FAIL?
• Would I trade this with real money today?

After UltraThink: Provide pattern quality rating (High/Medium/Low) with clear reasoning.

High-Quality Patterns:

• Clear, well-formed structure
• Occurs at significant S/R level
• Volume confirms pattern
• Multiple timeframe alignment
• Fits within larger market structure

Low-Quality Patterns:

• Messy, ambiguous structure
• Occurs in middle of range (no S/R context)
• Volume doesn't confirm
• Conflicts with higher timeframe
• Too small/insignificant

Always assess and communicate pattern quality to the user.

Common Mistakes to Avoid

1. Pattern Shopping: Don't force patterns where they don't exist
2. Ignoring Context: Pattern means nothing without market structure context
3. Premature Entry: Wait for pattern completion and confirmation
4. Wrong Timeframe: Higher timeframe patterns more reliable
5. No Invalidation Plan: Always know when pattern has failed

Output Format

When identifying a pattern, provide:

## Pattern Identified: [Pattern Name]

**Quality:** [High/Medium/Low]
**Timeframe:** [Chart timeframe]
**Prior Trend:** [Up/Down/Range]

### Pattern Elements
- [Element 1 present/absent]
- [Element 2 present/absent]
- [Element 3 present/absent]

### Trading Plan

**Entry:**
- Conservative: [Entry point with confirmation]
- Aggressive: [Entry point without confirmation]

**Stop Loss:**
- [Placement and price level]

**Targets:**
- T1: [Level] (R:R = [ratio])
- T2: [Level] (R:R = [ratio])

**Invalidation:**
- [What price action would invalidate this pattern]

### Risk Assessment
- Pattern Quality: [High/Medium/Low]
- Confidence: [High/Medium/Low]
- Recommended Position Size: [% of normal size]

### Notes
[Any additional observations or considerations]

Remember: Not every price movement is a pattern. Sometimes the best trade is no trade. Guide users to high-quality, high-probability setups.