A Matching Low Candlestick Pattern is formed when two bearish candlesticks with the same closing price appear on the candlestick chart. A corresponding low pattern is created when there is a drop in price, signaling a possible downside or when the price reaches a support level. According to the pattern, the price can go in any direction, but usually, it will go down.
Matching Low Candlestick Pattern
Matching Lows is an uptrend reversal. It contains two bearish candles and has a similar closing price. This pattern does not have a bearish shadow. It is often created in indices and stocks. This indicates that a new uptrend is about to begin. Sometimes a Matching Low Pattern also acts as a downtrend continuation pattern. But mainly, it acts as a trend reversal pattern.
Matching Low Candlestick Pattern Features
A Matching Low Candlestick pattern has the following characteristics:
1-The market is trending down
2-The first candle has a long black body and is pointing downwards.
3-The second candle also has a black body. It closes at the same point where the first candle closed.
4-Both candles have lower shadows. The bottom two shadows can also have similar lows
The theory behind the pattern is that when the second candle fails below and near the first, it creates support for a bullish reversal. The bulls create an uptrend through a support level.
Identification of the Matching Low Candlestick Pattern
The corresponding low candlestick pattern consists of two bearish candles. Here are the signs by which we can find Matching Low candlestick patterns:
- The first real body will be large and bearish, indicating strong selling momentum in the market. The previous trend of this candle must also be bearish.
- The second candle will open with a gap but within the range of the previous candle. It will close at the closing price of the previous candle. This will also be of a discount nature.
- There will be no shadow at the bottom of the candlesticks.
Trader Sentiment Regarding Matching Low Pattern
Assume the market is forming bearish energy and an active downtrend. The first candle closed below the opening price with a large real body, showing that sellers took control at the beginning of the session and maintained control until the close. The trend has added more bearish energy, and the bulls remain on the defensive due to the lack of buying power. However, the second candle’s vulnerability is higher, reaching the upper half of the first candle’s body. The price action has shaken the confidence of the bears and strengthened the resolve of the bulls.
Sellers will take control after the opening pressure of the second candle and push the price lower until the end of the first candle.
The inability to register a lower closing price while establishing support levels at the closes of the first and second candles indicates a decrease in selling. However, bullish strength remains weak, discouraging new bullish positions as the bell closes. So, the trader can wait and see how his 3rd and 4th candles perform (his next two candles after the pattern appears). Traders look for long entries when the price rises according to the pattern. If the price falls below the pattern, the trader exits their long position or sells short.
Matching Low Candlestick Pattern Trade
The chart above shows that there are two candlestick patterns of order execution. The first example shows that there is a small upward movement when the price moves above the top of the two-candle pattern. This also caused a false breakout on the reverse side of the pattern.
The second example occurs during a decline. The price broke below the low of 4 candles, indicating the possibility of a downtrend break and a short-term trade. The price fell for two more sessions and then rose.
Traders should add filters or conditions to ensure they enter a trade when it is in their favor. The filters that help weed out bad traders are:
1-Volume
2-Volatility
Volume
Tracking market volume is a great way to see the strength behind the volatility. When a trader observes a move in a price chart, he cannot easily understand the belief behind that move. Knowing the volume, the trader can better understand the reasoning behind the move.
Usually, when trading volume is high, it shows that it is very important to observe patterns and traders. Here are the volume filters.
- Volume is above or below the capacity of the previous bar.
- Volume is above or below the capacity of the previous bar.
- The volume is above or below the moving average volume.
- The volume of this bar is the highest historical volume x bar.
- Test and make sure what works best for our time and market.
Volatility
Market volatility can have a significant impact on the performance of any strategy. We can see that some strategies work well in low-volatility environments and others in high-volatility environments. The ADX indicator is one of the best ways to turn volatility into a trading strategy.
Average Directional Index (ADX) and volatility are those concepts that work very well in almost any market and are difficult to fit the curve.
In common sense, the market is considered to fluctuate when the ADX is above 20 and the rest when it is below 15. With some adjustments, the trader can achieve better results. For example, note that a setting of 5 to 30 works fine. So, there’s absolutely no reason to leave them as the default
Often, backtesting is recommended to find a better framework for the market.
Matching Low Trading Strategies
Matching low trading strategies is not a complete package to start trading. They were given the idea to start experimenting with the respective socks. It also helps to recognize something worthy of the trader’s time. the strategies below;
- Match low with claim gap
- Match low with confirmation
Key Conditions for Trading a Matching Low
On the price chart, it is very important to know where the candlestick pattern is. For example, if the formation of a bullish reversal pattern occurs at the top of the chart, then the trader cannot take in the full possibility of a trend reversal because its formation will happen at the bottom of the price chart.
A suitable low could work well if a formation occurs at
-support/request area
-overbought form
The matching low also works as a trend continuation candlestick pattern direction under some conditions: to solve this, the trader should wait until the formation of the third candle,
Conclusion
It is better to use Matching low candlestick patterns for the purpose of technical analysis rather than live trading strategies. The formation of a Match Low pattern occurs when two candles with the same closing price appear on the candlestick chart. This is a bullish trend reversal. In which the market trend is decreasing. While trading with the right candlestick pattern, we need to monitor the volume and volatility of the market.
