Matching Low candlestick pattern

The Matching Low Pattern is a two bearish candlesticks pattern that is typically considered a bullish reversal pattern and appears at the end of a downtrend. This pattern doesn’t have the bearish variant. Not a very reliable pattern as the bearish trend might continue after the pattern.

The Matching Low Pattern signifies a period of uncertainty in the market following a prolonged downtrend. Even if the 2nd candlestick opens lower than the 1st candlestick, it can’t close below it and form a new low. Similar closing prices reveal a lack of conviction among sellers to push prices down. This pattern is seen as a potential indication of a bullish reversal, suggesting a weakening of selling pressure and the possibility of buyers gaining control.

Construction

1st

• occurs in downtrend
• long red body
• very short or no low shadow

2nd

• red body shorter than 1st candlestick body
• opening price below 1st candlestick opening price^①
• closing price similar or identical to 1st candlestick closing price^②
• very short or no low shadow (identical to 1st candle)

Traders often seek additional confirmation signals, such as a following bullish candlestick or an increase in trading volume. Breaking above a trendline or the nearest resistance zone formed by the first candlestick can serve as the confirmation.

While the Matching Low Pattern can indicate a potential reversal, it's crucial to use it in conjunction with other technical analysis tools and indicators.

Stop loss order can be placed below the low of the 2nd candle to manage risk.