Good Trading requires the Best Charting Tool!- The matching low candlestick pattern is a 2-bar bullish reversal pattern.
- It occurs during a downtrend.
- As his name suggests, both lows from the 2 candles are equal.
Statistics to prove if the Matching Low pattern really works
Are the odds of the Matching Low pattern in your favor?
How does the Matching Low behave with a 2:1 target R/R ratio?
From our research the Matching Low pattern confirms 43.5% of the time on average overall all the 4120 markets we analysed. Historically, this patterns confirmed within 3.7 candles or got invalidated within 3.1 candles. If confirmed, it reached the 2:1 R/R target 42% of the time and it retested it's entry price level 88% of the time.
Not accounting for fees, it has an expected outcome of 0.261 $/$.
It means for every $100 you risk on a trade with the Matching Low pattern you make $26.1 on average.
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How to handle risk with the Matching Low pattern?
We analysed 4120 markets for the last 59 years and we found 114 630 occurrences of the Matching Low pattern.
On average markets printed 1 Matching Low pattern every 136 candles.
For 2:1 R/R trades, the longest winning streak observed was 33 and the longest losing streak was 83. A trading strategy relying solely on this pattern is not advised. Anyway, make sure to use proper risk management.
Keep in mind all these informations are for educational purposes only and are NOT financial advice.
If you want to learn more and deep dive into candlestick patterns performance statistics, I strongly recommend you follow the best available course about it. Joe Marwood (who's a famous trader with more than 45 000 Twitter followers) created an online course called "Candlestick Analysis For Professional Traders" in his Marwood Research University. There he will take you through the extensive backtesting of the 26 main candlestick patterns. He then summarizes which one is THE best pattern. Do you know which one it is?
Remember, don't trade if you don't know your stats. Click here to signup to the course now!
What is the matching low candlestick pattern?
The matching low candlestick pattern is a bullish reversal pattern that occurs during a downtrend. It has two candlesticks. During a downtrend, the first candle of the first day is a long black candle. The second candle of the second day is a small black candle. Both of these candlesticks have identical closes that indicate short-term support is on the horizon and a trend reversal in the market is highly likely on the following candlestick. The matching low pattern is highly rated among the technical analysts.
How to identify the matching low candlestick pattern?
The matching low candlestick pattern is a two-bar pattern appearing during two trading sessions. It has the following characteristics.
- The current trend in the market must be a downtrend as the matching low pattern is a bullish reversal pattern.
- A long black candlestick must appear on the first day.
- The second candle follows the first one on the second day with opening higher than the close of the previous day.
- The second candlestick must also have a closing price equal or extremely close to the opening price of the first day.
- Both of the candles must be without lower shadows or wicks.
What does the pattern tell traders?
The matching low candlestick pattern is an effective bearish reversal pattern that conveys multiple pieces of information to the traders. The appearance of the first long black candle suggests that the already strong downtrend is likely to continue. At this stage, traders can clearly see that bulls are successful at opening the price higher than the previous day’s closing price. This raises concerns for the short-seekers who start to cover immediately.
However, the bears have still a strong hold on the market and are able to close the price at the low of the day. Yet, this closing price is similar or extremely close to the closing price of the previous day. The appearance of the second small candle suggests that bears are losing control over the market. It’s visible because they could not close below the close of the previous day. This situation indicates that this is a support level for a bullish reversal. Bulls are likely to capitalize on the support level and may attempt a rally to create a new uptrend.
Moreover, this support level is important because traders may look for a rebound in prices after the appearance of the matching low pattern using close of the previous day as a support level. They may also look for a stop-loss point for this position. For example, after the confirmation, they can initiate a move by placing a stop-loss below the low of the first and second candles. The confirmation is provided by a third candle moving above the high of the first or second candle. Technical analysts and experts suggest waiting for the confirmation before initiating a trade to reduce the risk. If the prices move higher after the appearance of the matching low pattern, it is a confirmation and traders should look to enter a long position.
How does the Matching Low pattern look in real life?
Looking to learn more about this pattern?
You should take a look at Joe Marwood's online course. In his course, he backtested the 26 main candlestick patterns before to summarize which one is THE best pattern. I really liked his course and you shouldn't miss it!
Click here to signup to his "Candlestick Analysis For Professional Traders" course now!
We loved Marwood Research’s course “Candlestick Analysis For Professional Traders“. Do you want to follow a great video course and deep dive into 26 candlestick patterns (and compare their success rates)? Then make sure to check this course!