What is a 'Mat Hold Pattern'

A mat hold pattern is a pattern found in the technical analysis of stocks that ultimately indicates the stock will continue its previous directional trend, meaning bullish or bearish.

This type of pattern is initially indicated by a significant trading day in one direction or another, followed by three small opposite trending days. The fifth day then continues the first day's trend, pushing higher or lower, in the same direction as the first day's movement.

BREAKING DOWN 'Mat Hold Pattern'

A mat hold pattern is considered a very reliable but rare indicator in the technical analysis of stocks. It is often confused with the rising three's indicator, with the difference being that the trades on days two to four of the rising three indicator generally stay within the high and low established on the first day.

The rising three methods, also known as a rising three methods pattern or just a rising three pattern, is a bullish candlestick pattern. Investors and analysts use this pattern to try and predict whether the current uptrend will continue, and to what degree. Analysts and traders generally assume this chart pattern indicates this momentum will hold steady and the upward trend will continue.  

With a mat hold pattern, on the other hand, the trading range of days two to four in the pattern can trade outside of the high-low range made on the first day.

Mat Hold Pattern and Technical Analysis

A mat hold pattern is one type of pattern that can be identified through the technical analysis of stocks. There are two different approaches to evaluating and studying financial markets: technical analysis and fundamental analysis. They can each tell you important things, but each focus on specific findings and use different tactics and methods to draw conclusions and make predictions.

Technical analysis is the study of trends and historical market data. Technical analysts will look at the price movement of a particular security and use this data to try and make predictions about future activities and performance. Technical analysts will generally refer to charts and graphs as a starting point.

Fundamental analysis, on the other hand, involves studying financial and economic factors that have an impact on a business. Fundamental analysts begin by reviewing a company’s financial statements and other economic records such as a balance sheet and cash flow statements. Technical analysts believe that these reviews are just unnecessary work, since the technical approach is based on the idea that the stock activity and history will tell you everything you need to know to determine where the price might be headed.

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