The W-M Pattern Trading Strategy
Presenting the W-M Price Pattern in TradingView
3 min readDec 11, 2024
Pattern recognition is a key concept in trading. This article discusses the W-M price pattern, a configuration detected on a normalized index with the aim of predicting short-term reversals.
The W-M Pattern
The W-M pattern is a price configuration seen on the normalized index which takes the close price as an input.
The normalized index takes the recent n close prices and traps them between 0 and 1 with 0 representing the lowest close price in the lookback period and 1 representing the highest close price in the lookback period. The trading conditions of the W-M pattern are as follows:
- A long signal is generated whenever a successive W shape is formed on the normalized index. Similarly, the close price of the last leg of the W must not be above the previous high and the normalized index must not surpass 0.50.
- A short signal is generated whenever a successive M shape is formed on the normalized index. Similarly, the close price of the last leg of the M must not be below the previous low and the normalized index must not break 0.50.
The W and M patterns should look like this:
