# Setup Taxonomy

Use these definitions near the hard right edge. Setup names are secondary to context.

## Trend Continuation Setups

### High 1 to High 4

- Use for long continuation attempts inside a bull trend or bull leg.
- Count the number of pullback attempts after the trend resumes upward.
- Higher counts are not automatically better. Context still dominates.
- Better when:
  - trend is still intact
  - pullback is orderly, not a full reversal
  - signal bar is bullish or at least acceptable
- Downgrade when:
  - the pullback is deep and two-sided
  - the setup forms in the middle of a range
  - the market is pressing into resistance or a measured move target

### Low 1 to Low 4

- Use for short continuation attempts inside a bear trend or bear leg.
- Same logic as High 1 to High 4, mirrored for the short side.

### Breakout Pullback

- A breakout has already occurred and price is now testing the breakout area for the first meaningful time.
- Better when:
  - breakout had strong bodies and follow-through
  - pullback is small or hesitant
  - entry is in the direction of the breakout
- Downgrade when:
  - breakout lacked follow-through
  - pullback is too deep
  - the chart is in obvious breakout mode and not yet resolved

### Tight Channel Breakout Pullback

- A tight channel often ends with a breakout attempt and then a first pullback.
- Better when the channel was clear, relentless, and the first counter move was small.
- Downgrade when the channel has already widened into a broad channel.

### IOI

- Inside bar, outside bar, inside bar sequence.
- Often represents compression and breakout mode.
- Better when the pattern forms as a pause inside an existing trend.
- In a range, treat it more as breakout mode than as a high-confidence directional entry.

## Reversal Setups

### Wedge Top / Wedge Bottom

- Three pushes in one direction with reduced momentum or worsening follow-through.
- Better when the wedge appears:
  - at a channel line
  - after a climax
  - at a measured move target
  - near a major prior high or low
- Downgrade when:
  - it appears in the middle of a range
  - there is no credible reversal signal bar
  - the trend is still very strong and has not shown loss of pressure

### Double Top Pullback / Double Bottom Pullback

- A test of a prior extreme that fails to continue cleanly.
- Better when the second test has weaker momentum or a strong rejection bar.
- Downgrade when the two tests are too far apart to matter or when the entire structure is just range noise.

### Final Flag

- A late continuation structure near the end of a mature trend.
- It often looks like a normal pause until the breakout fails.
- Better when the trend is already climactic or stretched and the flag is late.
- Do not force this label early in a healthy trend.

## Signal Quality Checklist

Ask these for every setup:

- Is the setup aligned with `always_in`?
- Is the signal bar strong enough for a stop entry?
- Is there room to the first realistic target?
- Is the setup at a meaningful location?
- Does the market need one more bar of confirmation?

If the answer is mixed, use `watch` instead of `actionable`.

## Common Failure Patterns

- A nice-looking signal bar in the middle of a range
- A continuation setup after the trend has already become climactic
- A reversal setup without location
- A breakout pullback after a weak or failed breakout
- Counting bars mechanically while ignoring market phase