Concepts

STRAT Matrix Signals: 1, 2, 3, Failed Breaks, and Continuity

Decode each STRAT cell and learn why agreement across timeframes matters more than one isolated label.

By HedgePulse EducationReviewed by HedgePulse Product7 min read
01 · The frame

Every cell compares candles

The current candle is classified against the prior candle, with a third candle used for inside-breakout and outside-continuation sequences.

  • 1 = inside
  • 2 = directional
  • 3 = outside
02 · Direction

2u and 2d confirm the break

A 2u takes the prior high and closes above it. A 2d takes the prior low and closes below it.

  • 2u = upward break
  • 2d = downward break
03 · Failure

The F marks a break that did not hold

2uF traded above the prior high but closed back inside. 2dF traded below the prior low but closed back inside. HedgePulse treats them as reversal-down and reversal-up context respectively.

  • 2uF = failed up break
  • 2dF = failed down break
04 · Sequences

Prior structure changes the label

An inside candle followed by a close through its boundary becomes iUp or iDn. An outside candle followed by continuation becomes 3-2u or 3-2d.

  • 1-1 = consecutive inside
  • iUp / iDn = inside breakout
  • 3-2u / 3-2d = outside continuation
05 · Continuity

Read across, not in isolation

Short timeframes react first. Daily, weekly, and monthly cells provide broader context. Agreement is continuity; disagreement is mixed structure.

  • 1m through 1h = intraday
  • 1d, week, month = broader context

What the STRAT Matrix measures

Each cell classifies the current candle relative to prior candle structure for one timeframe. HedgePulse calculates the same rule set from 1 minute through month, letting you scan continuity without opening eight charts.

STRAT candle possibilities showing prior range and current candle classifications

The three base scenarios

Signal Application rule Meaning
1 Current high is at or below the prior high and current low is at or above the prior low Inside candle; range compression.
2u Current candle trades above the prior high without taking the prior low, then closes above the prior high Confirmed upward directional break.
2d Current candle trades below the prior low without taking the prior high, then closes below the prior low Confirmed downward directional break.
3 Current candle trades above the prior high and below the prior low, then closes inside the prior range Outside candle with a neutral close.
3u / 3d Outside candle closes above the prior high or below the prior low Outside expansion with confirmed direction.

Failed directional breaks

2uF means the candle traded above the prior high but closed back inside the prior range. It is a failed upward break and is classified as reversal-down context.

2dF means the candle traded below the prior low but closed back inside the prior range. It is a failed downward break and is classified as reversal-up context.

The candle color can still matter for neutral or failed structures, which is why the application preserves green/red prefixes internally for selected labels.

Multi-candle sequences

  • 1-1 means two consecutive inside candles.
  • iUp means a prior inside candle is followed by a close above its high.
  • iDn means a prior inside candle is followed by a close below its low.
  • 3-2u means a prior outside candle is followed by an upward continuation close.
  • 3-2d means a prior outside candle is followed by a downward continuation close.
  • GapUp / GapDn means the current candle's entire range is above or below the prior candle's range.

How to read continuity

Begin with the broader timeframes, then work toward the shorter ones. If day, week, and month point in the same direction, shorter-timeframe signals can be read inside that larger context. When the row alternates between red, green, and neutral, continuity is mixed.

The matrix describes candle structure. It does not predict that the next candle must continue, and it does not replace risk management.