Definition:
The Bullish Mat Hold Pattern is known as a strong continuation
pattern. In this pattern, a long white candlestick appears
during an uptrend, which then is followed by three consecutive
small real bodies that constitute a short downtrend.
Then bull ascendancy begins on the fifth day marked
with a closing price that is a new high.
Recognition Criteria:
1. Market is characterized by uptrend.
2. We see a long white candlestick in the first day.
3. We then see an upward gap and a black candlestick
on the second day.
4. We see a sequence of small real bodies constituting
a brief downtrend however staying within the range of
the first day on the second, third, and fourth days.
5. Finally we see a white candlestick, which opens with
a gap and closes with a new high on the fifth day.
Explanation:
The pattern appears during an uptrend, which is further
confirmed by the first long white candlestick. Prices
open with a gap next day and they trade within a narrow
range closing at a slightly lower level. This may be
a lower close but it is still a new closing high along
the uptrend. This however suggested that the bulls now
prefer to rest while the bears are encouraged. The next
couple of days start causing some concern about the
ability of the upward move to sustain itself since these
days open at the level where the market closed on the
previous day and they close at slightly lower levels.
In any case, the markets are still higher than the opening
price of the first day even on the third day, and remember
that the first day was a long white candlestick day.
This observation shows that there was an attempt for
reversal but it failed. Prices rise again to close at
a new closing high apparently showing that the events
of past few days were only a pause in a strong upward
trend. It appears that attempts to reverse the trend
occurred, but failed. The upward trend should continue.
Important Factors:
The Bullish Mat Hold Pattern is similar to the Bullish
Rising Three Methods Pattern. The difference is that
the reaction days, two, three, and four are altogether
higher than those in the Bullish Rising Three Methods
Pattern.
