BULLISH MATCHING LOW
Definition
This pattern occurs when two black candlesticks appear with equal closes during a downtrend. The Matching Low pattern suggests that a bottom has been established, despite the new low being tested and no follow-through occurring. This indicates a strong support level.
Recognition Criteria
1. The market is currently defined by a dominant downward trend.
2. On the first day, a black candlestick is observed.
3. The second day follows with another black candlestick whose closing price is exactly equal to the closing price of the first day.
Pattern Requirements and Flexibility
The Bullish Matching Low consists of two black candlesticks. The length of the first candlestick should be normal or long. Both candlesticks should close at the same level.
Trader’s Behavior
The market has been lower, as evidenced by a strong black candlestick on the first day. On the second day, the market opens higher, trades even higher, but ultimately closes at the same price as the previous day. This indicates short-term support and raises concerns for the bears. The key aspect reflecting the market psychology is the identical closing prices on both days, rather than the daily trading action.
Buy/Stop-Loss Levels
The confirmation level is defined as the midpoint of the first black body. Prices should cross above this level for confirmation.
The stop-loss level is set at the lower of the last two lows. After a BUY signal, the stop-loss is triggered if prices decline instead of rising and either close below the stop-loss level or record two consecutive daily lows below it, without any bearish pattern being detected.