Matching Low

The matching low candlestick pattern is a reversal pattern, is bullish in nature, and is similar to the homing pigeon candlestick pattern except that the two days of this pattern close with equal closes in a downtrend. There are certain criteria that must be met in order to confirm that this pattern has occurred. First, the market has been in a downtrend for a significant amount of time. Second, the body of the first candle is black and it occurs at the end of the trend. Third, the second day’s candle must also be black, it opens higher than the close of the previous day, and the closing price must be equal to or very close to the closing price of the previous day.

What does the matching low pattern indicate is occurring in the markets?
This signal indicates short term support and those shorting must watch for this potential reversal signal and must start to cover their positions. Longs, on the other hand, should not take a position yet, but should wait for the high of the second black candlestick to be exceeded first. The overview of this pattern is as follows: The first day the market continues to move down and the following day continues to go up as the bulls open the price higher than the previous day. The bears then push the close for the second day to equal about the same as the closing price of the previous day. The bears are concerned that a support level has been reached as they can no longer continue to push the price down.

Is confirmation on the third day required for this pattern?
Yes! Confirmation of a reversal of the downtrend is required on the third day for the matching low candlestick pattern. This can occur in the form of a white candlestick, a higher close on the third trading day, or a large gap up. Ensure that one of these three possible confirmations occur.

Japanese Candlesticks are the fastest way for new investors to quickly and accurately read stock charts. Once you are comfortable with the major candlestick signals, and you have learned how to read stocks charts continue to expand your expertise by learning the various secondary Candlestick Patterns. Combine these with your favorite technical analysis indicators, such as the moving average, and you have the perfect trading arsenal for evaluating stocks, currencies, commodities, or exchange traded funds.