Do trading patterns have predictive capabilities over random walk? Studies show the answer is a statistically significant yes.
Studies show predictive patterns can statistically outperform random trading during the same time period.
That means you can gain an edge over guessing just by employing pattern recognition.
It is important that a pattern work for all types of market environments. According to this study, there exists patterns that, no matter what the underlying dynamics are, still outperform randomness by 50-150%.
Source: Finding Predictive Patterns in Historical Stock Data Using Self-Organizing Maps and Particle Swarm Optimization HANS SALOMONSSON
Note: indicators are not based on this study, but on actual market observation and back-testing.