Key Highlights

• Two lower candlesticks with similar or equal closing prices create the matching low pattern.
• The pattern occurs when the price falls, indicating a possible bottom or the price has reached a support level.
• When the price follows the pattern, it can actually move either way, but it usually moves lower.

Matching Low Candlestick Pattern Meaning

A bullish trend reversal pattern with two bearish candlesticks looks to be the matching low. This pattern takes place when the downtrend is in progress. Traders will be able to predict the direction of market movement by means of a matching low candlestick pattern.

This concept assumes that selling will come to an end, showing a declining stock price. When traders see a price at support levels, they will be shown the same low candlestick pattern. The stock price might fluctuate at any time, although traders frequently observe the side that is declining. The concept of market sentiment is based on the matching low pattern.

The market is in a downward trend A long black real body stretches downwards in the first candle. A similar black real body, which closes against the first, appears in the second candle. It is precisely this point where, despite the low shadow, both candles display a similar closing price.

On the basis of this concept, if a second candle closes at an identical price, it would result in a fall in prices which would then bring about a bull trend reversal. Bull traders use this to try and make a quick recovery after a decline. That's an entirely different trend, but it's a higher one. Here is a very brief example to give you an idea of this concept.

Example of Matching Low Candlestick Pattern

Suppose there are two companies, Company A and Company B, dealing in the same kind of products, and they are competitors. As a result of lower prices, the majority of customers chose Company A's products, although their quality was relatively unaffected by competition in the market. In contrast, Company B is selling a different variety of the same product, with a hint of variation and superior quality.

Since the products are significantly more expensive in this instance, they make a discount offer and free sample idea to show clients that they are getting good value for their money.

That has changed the fate of Company B and resulted in an overwhelming number of customers visiting from their next sale. The sales at Company A had fallen to an all-time low. The value of their company's stock fell while they were planning to come up with another grand idea in order to get the customer's trust. This has led to the continued sale of shares in Company A on the market. All companies have a certain amount of revenue and factors that affirmatively define their business.

This would allow the stock's price to stabilize and then reach its support level. Traders can experience a surge in prices due to buying pressure or a fall due to the least amount of selling on the market when the price of the stock touches the support level. Short story, when there are steep drops in the stock price, traders can identify a similar low pattern. The indicator indicates the stock price has fallen to a low or support level.

Trading Matching Low Candlestick Pattern

You will see two candles at the beginning, where the first black candle comes first, and the second one opens higher the following day but above the closing price of the previous day. The second candle closes just as well and at a similar rate to that of the previous day.

As soon as the pattern is detected, you will be able to see stock prices touching their lowest or support levels. The decline in prices will continue to happen ahead of schedule. The bull traders here have a chance to increase prices, whereas the last day's closing price is always lower. This is for the first long black candle. The bears lost in the middle with the second candle because of the falling prices. The price of stocks may rise or fall.

Psychology of Matching Low Candlestick Pattern

It's bulls and bears making moves and trying to control each other. That's the whole theory of the matching low pattern. When the markets fall sharply, bears get excited about a rise in confidence and a decline in bulls. Therefore, there would be an even more significant drop in the stock price. The bulls are in a stronger position than the bears when the second candle narrows between closing and opening. It's a reversal of the bearish trend, followed by the likelihood of a stock price rise.

Conclusion

There are no profit targets for candlestick patterns. Therefore, it is for the trader to determine when he will take profits in trading a similar low pattern. The pattern is infrequent, which means that the opportunities for developing strategies based on these patterns will be limited. In order to validate matching low trading signals, traders are advised to use other analytical methods such as price action, technical indicators, or larger chart patterns.