DEFINITION of 'Matching Low'

The matching low is a two-candle bullish reversal pattern that appears on candlestick charts.

BREAKING DOWN 'Matching Low'

The matching low pattern is a two-candle bullish reversal pattern, where:

  • The market is trending lower;
  • The first candle has a long black real body;
  • And, the second candle has a black real body that closes at about the same level as the close of the first candle.

The theory behind the pattern is that the failure of the second candle to break close below the first candle creates a support level for a bullish reversal. Bulls are likely to attempt a rally using the support level that could overwhelm the bears and create a new trend higher. The pattern performs best in temporary downturns following a larger uptrend rather than during times when the price is trending lower over several timeframes.

Traders should look for a rebound in the price following the matching low pattern, while using the prior day’s close as a support level – or potentially a stop-loss point – for the position. However, it’s important for traders to look for other signs of a reversal rather than relying exclusively on the matching low, as it doesn’t have the best predictive abilities.

The inverse of the matching low pattern is the matching high pattern that signals a bearish reversal during an uptrend.

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