The matching low candlestick pattern is similar to the homing pigeon candlestick pattern. The exception is that both days of this two-day pattern’s close are at the same low level. Since both day’s black (or red) candles close at the same level, this matching low signal indicates that the bottom is hit after a long downtrend. See criteria for matching low candlestick pattern below.
Criteria for Matching Low
- The body of the first candle is black (or red) and the body of the second candle is black (or red).
- The downtrend is evident for a good period of time and a long black (or red) candle occurs at the end of the trend.
- The second day opens higher than the close of the previous day and it closes at the same close as the prior day.
- For a reversal signal, further confirmation is required to indicate that the trend is moving up in direction.
Pattern Psychology Behind the Matching Low
After a strong downtrend is in effect, and after a long black (or red) candle occurs, the bulls open the price higher than the previous day’s close. The shorts get concerned and start to cover; however, the bears still have enough control to close the price at the low of the day. Again this low is the same low as the close of the previous day. The psychological impact for the bears is that the second day couldn’t close below the previous day’s close and it causes concern that this is a support level.
Throughout his investment career, Stephen Bigalow has directed his investment acumen towards developing improved methods for extracting profits from the investment markets. His research, encompassing all fundamental and technical methods, resulted in verifying that Candlestick analysis was superior to any other method.
One of the biggest misconceptions of investors is that prices move based upon fundamental reasons when in fact prices move based upon the “perception” of fundamental reasons. The Japanese Rice traders discovered this many centuries ago. Why do prices go down when good news is announced? The answer is that the anticipation of that good news was already built into the stock price.
Please continue to learn how to identify each different candlestick trading pattern as well as what that pattern indicates is occurring in the markets.
