I'm obliged to defend trading price patterns because I use it. I think people use it in different ways from what it was originally taught by the early pioneers. Over the years, newbies or instructors come with different interpretation and perceptions on how these patterns work. I, for one, use them daily to daytrade. But I thing I would like to emphasize, and this goes for other types of technical analysis using indicators etc, is that price patterns in higher timeframes than the timeframe you use to make your
entries and exits are the ones that work.
Many people assume that the same price patterns forming in the same timeframe they use to trade work at a higher percentage. They do happen but I always rely higher timeframe pattern to confirm my direction and timing of my trades. 2nd, many make their entries without pattern confirmation... big mistake. I always wait for the break of the pattern, pullback or retrace, then proceed in the expected direction, that's when I come and not come in at the first break. As market change where more and more fakeouts, false moves, etc keep fooling the average trader that confirmations become a necessity to trade successfully. I also use patterns along with S/R and Pivots, so it's not a be-all, end-all strategy. Like everything else in trading, nothing by itself works, combine with other things work wonders.
The concept behind price patterns is well... price. So Price is King in patterns. If you take a look at the formations, they are an advanced version of price action... how? higher highs and higher lows or lower highs and lower lows. So, back to head-and-shoulder, what do you see? Higher high/higher low, then the right shoulder... what happens? Lower high/lower low. Same logic as price action to me. I think alot of people assume price projections from patterns are bunch of bull. Fine by me. At least I have a target to shoot for and determine my R/R before committing a trade. I know price projections (measured moves) work very well in Forex.