Kardex Trader argues retail traders wrongly treat chart patterns like double tops as automatic sell signals. He shows why a strong opening that pulls back still signals a long bias when you examine transaction flow and market sentiment instead of just naming the pattern.
It's like when people see patterns, they'll see a pattern where it's like, oh, well, you know, you have a double top pattern, right? Or a head and shoulders, right? And they're like, if we hit the top twice, that means the trade's going to go down. And it's like, no, I think that's very stupid to think about it from that approach. The approach to think about it is to understand why did it reject here? What is going on here? What happened around here? What is the direction of sentiment? So, for example, if you take a trade, let's say this is all you see, but you take a trade that opens up really strong, pulls back, has strength here, continues. Will you short that? Probably not. You probably assume that, hey, the transactions and the activity that's happening here is a lot stronger than there. It makes more sense to go long. It doesn't make sense to close your eyes and say, oh, it's a double top pattern. Let me go short. So that same concept of like questioning things and making it logical goes into your playbooks.
