BEARISH MATCHING HIGH
Definition
This pattern occurs when two consecutive white candlesticks appear in an uptrend, both having equal closing prices. It signals that a top has been reached, as the new high was tested but failed to hold, indicating a strong resistance level.
Recognition Criteria
1. The market is currently defined by a dominant upward trend.
2. A white body is observed on the first day.
3. On the second day, another white candlestick forms, with its closing price exactly matching the closing price of the first day.
Pattern Requirements and Flexibility
The Bullish Matching High pattern is composed of two white candlesticks. The first candlestick should have a normal or long body, and both candlesticks should close at the same level.
Trader’s Behavior
The market has been rising, as indicated by another strong white candlestick day. On the following day, the market opens lower, trades even lower, but closes at the same price as the previous day. This pattern suggests short-term resistance and is likely to cause concern among bullish traders. The market psychology here is not just influenced by the daily trading actions, but by the fact that both days close at the same level.
Sell/Stop-Loss Levels
The confirmation level is determined as the midpoint of the first white candlestick. For confirmation, prices must move below this level.
The stop-loss level is defined as the higher of the last two highs. Following the bearish signal, if prices rise instead of falling and either close above or make two consecutive daily highs above the stop-loss level, without detecting any bullish pattern, the stop-loss is triggered.