Well, that's an interesting question.  Does it know or see patterns?   It doesn't 'know' a chart pattern the same way that we know it but it is supposed to buy oversold and sell overbought conditions.  So no it doesn't actually see the breakdown but reacts to a situation that usually relates to a pattern breakdown of some sort, by definition.   IMHO I believe the flaw in this system as it pertains to recent markets is that the market tends to slowly grind up or sideways for long periods of time, perhaps due to a lack of volume or real interest in markets in general.  The algos and HFT systems tend to clamp the markets in small ranges.   Over time the clamp eventually 'breaks' so to speak, perhaps due to geopolitical reasons, Greece or something, and boom we move drastically, which hurts any mean reversion system that tries to grab range based profits.   We are either experiencing extremely low volatility, which is bad for trading, or extreme moves every so often, which is tough for trading too, unless you can jump on the momentum every 3 months and ride it.  Just a tough environment for everyone involved.  Hope it gets better!