1. A method for identifying touch patches on a touch sensor panel, comprising: measuring touch values of touch pixels on the touch sensor panel; identifying a touch pixel having a largest touch value as representing a peak; associating a plurality of touch pixels in an area surrounding the peak with a patch of touch pixels including the peak; and selectively merging two or more non-overlapping patches of touch pixels into a single patch of touch pixels utilizing predetermined merging criteria upon determining that a number of touch pixels in at least one of the two or more touch patches is greater than a predetermined threshold.