Pattern Matching Algorithms

The pattern matching system supports three algorithms for finding similar candlestick patterns across stocks. Each algorithm offers different trade-offs between precision and flexibility.

1. Direction Only

Default

How it works: Each candle is encoded as a single character based on direction:

G = Green candle (close ≥ open)
R = Red candle (close < open)

Example Pattern:

G G R R G

5 candles: 2 up, 2 down, 1 up

Matching Modes

Mode	Description	Example
Strict	Exact match required	`GGRR` matches only `GGRR`
Lax	Allows +/- 1 candle per run	`GGRR` matches `GRR`, `GGGRR`, `GGRRR`

Best for: Simple directional patterns, short sequences (2-8 candles)

2. Direction + Size

How it works: Matches both direction and relative candle body sizes.

Size Categories

Each candle's body size is compared to the pattern's average:

Category	Criteria	Meaning
Small	< 50% of average	Narrow body, indecision
Medium	50% - 150% of average	Normal movement
Large	> 150% of average	Strong conviction

Matching Modes

Mode	Direction	Size
Strict	Must match exactly	Must match exactly
Lax	Must match exactly	Can differ by one level (S↔M, M↔L)

Best for: Finding patterns with similar magnitude moves

3. Candlestick Patterns

Advanced

How it works: Detects recognized candlestick formations and encodes them as pattern symbols. This dramatically reduces pattern length and finds semantically similar patterns.

Example Transformation:

18 candles (raw): GGRRRGGGGRGGGRRRRGG

↓

Encoded: BE-U3-D-MS-U2

18 candles compressed to 5 pattern symbols

Detected Patterns

Single Candle Patterns

Symbol	Name	Detection
`D`	Doji	Body < 10% of range (indecision)
`H`	Hammer	Body < 30% of range, lower wick > 2x body, upper wick < body
`SS`	Shooting Star	Body < 30% of range, upper wick > 2x body, lower wick < body
`M`	Marubozu	Body > 90% of range (almost no wicks)

Two Candle Patterns

Symbol	Name	Detection
`BE`	Bullish Engulfing	Red candle followed by larger green that completely engulfs its body
`XE`	Bearish Engulfing	Green candle followed by larger red that completely engulfs its body
`BH`	Bullish Harami	Large red candle, small green (< 50% body) contained inside
`XH`	Bearish Harami	Large green candle, small red (< 50% body) contained inside

Three Candle Patterns

Symbol	Name	Detection
`MS`	Morning Star	Large red (body > 50%), small middle (< 30%), large green closing above first's midpoint
`ES`	Evening Star	Large green (body > 50%), small middle (< 30%), large red closing below first's midpoint
`3W`	Three White Soldiers	Three consecutive strong green candles (body > 50%), each closing higher
`3B`	Three Black Crows	Three consecutive strong red candles (body > 50%), each closing lower

Directional Runs

Symbol	Name	Detection
`U#`	Up Run	# consecutive green candles (not matching a specific pattern)
`R#`	Down Run	# consecutive red candles (not matching a specific pattern)

Matching Modes

Mode	Behavior
Strict	Pattern symbols must match exactly
Lax	Runs can differ by +/- 1 count (U2 matches U1, U2, U3) Similar bullish patterns match (BE, BH, MS, 3W, H) Similar bearish patterns match (XE, XH, ES, 3B, SS)

Best for: Long patterns (10+ candles), finding semantically similar chart formations