As of 12/27/2024   Indus: 42,992 -333.59 -0.8%     Trans: 16,031 -73.46 -0.5%     Utils: 987 -4.51 -0.5%     Nasdaq: 19,722 -298.33 -1.5%     S&P 500: 5,971 -66.75 -1.1%	YTD  +14.1%    +0.8%    +12.0%    +31.4%    +25.2%	Targets    Overview: 12/12/2024     44,200 or 41,750 by 01/01/2025   16,700 or 15,500 by 01/15/2025   1,050 or 975 by 01/01/2025   20,500 or 19,300 by 01/01/2025   6,100 or 5,775 by 01/01/2025
Chart Pattern Indicator: on 12/27/24

As of 12/27/2024   Indus: 42,992 -333.59 -0.8%     Trans: 16,031 -73.46 -0.5%     Utils: 987 -4.51 -0.5%     Nasdaq: 19,722 -298.33 -1.5%     S&P 500: 5,971 -66.75 -1.1%	YTD  +14.1%    +0.8%    +12.0%    +31.4%    +25.2%
Targets    Overview: 12/12/2024     44,200 or 41,750 by 01/01/2025   16,700 or 15,500 by 01/15/2025   1,050 or 975 by 01/01/2025   20,500 or 19,300 by 01/01/2025   6,100 or 5,775 by 01/01/2025
Chart Pattern Indicator: on 12/27/24

Bulkowski on the Matching Low Candle Pattern

In my book, Encyclopedia of Candlestick Charts, pictured on the right, I explore the entire range of candlestick patterns from abandoned babies to windows (not exactly A to Z, but you get the idea), in both bull and bear markets, using almost 5 million candle lines in the tests.

The book takes an in-depth look at 103 candlestick patterns and reports on behavior and rank (3 types: reversal rate, frequency, and overall performance), identification guidelines, performance statistics (tables of general statistics, height, and volume), trading tactics (tables of statistics on reversal rates and performance indicators), and wraps each chapter with a sample trade. I share a sliver of that information below. If you like what you read here, then you will love the book. Help support this website and buy a copy by clicking on the above link.

As I create these candlestick pages, I am reminded that candles usually obey the prevailing price trend. In this case, the matching low candlestick is supposed to be a bullish reversal on the idea that the stock closed at the same price twice. It is a support zone. Testing reveals that the pattern pushes through this support and acts as a bearish continuation 61% of the time.

The surprising news about this candlestick pattern is how well price trends after the breakout, ranking 8th out of 103 candlestick types where 1 is best. Let's take a closer look at the matching low.

Matching Low Candlestick: Important Results

Theoretical performance: Bullish reversal Tested performance: Bearish continuation 61% of the time Frequency rank: 58 Overall performance rank: 8 Best percentage meeting price target: 69% (bull market, up breakout) Best average move in 10 days: 7.15% (bear market, up breakout) Best 10-day performance rank: 13 (bear market, up breakout) All ranks are out of 103 candlestick patterns with the top performer ranking 1. "Best" means the highest rated of the four combinations of bull/bear market, up/down breakouts. The above numbers are based on hundreds of perfect trades. See the glossary for definitions.

Matching Low

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Matching Low Candlestick: Discussion

The matching low candlestick has potential, as the introduction described. The candle is supposed to be a bullish reversal, but instead acts as a bearish continuation 61% of the time. It has a frequency rank of 58, which is about mid list. You will be able to find this candle pattern in a historical price series, but it won't be easy. The overall performance has a rank of 8 where 1 is best. That is excellent. The best average move is 7.15%, ranking 13th, where I consider 6% as being a good move.

The matching low candlestick does best after an upward breakout. Since price trends downward into the candle, that would mean the best performance comes when the candle acts as a reversal and not a continuation.

Matching Low Candlestick: Identification Guidelines

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Matching Low Candlestick: Three Trading Tidbits

If you want a few bones from my Encyclopedia of candlestick charts book, here are three to chew on. The pages refer to the book where the tips appear.

1. Matching low candles that appear within a third of the yearly low perform best -- page 564.
2. Matching lows within a third of the yearly low act as continuations most often -- page 567.
3. Trade the matching low as part of a downward retracement in an upward price trend -- page 565-566.

Matching Low Candlestick: Example

The chart shows a matching low candlestick pattern, circled in red on the daily chart. The price trend leads downward to the matching low candles which are both black. The first candle has a tall body, but the second need not. The closing price is what matches in the matching low, not the low price. Go figure.

The matching low in this example acts as a reversal candle. Why? Price trends downward into the candle pattern and breaks out upward. Thus, the direction changes from down to up. In fact the candle lows act as a support zone, highlighted here by the horizontal red line.

Notice how the breakout from the matching low candlestick creates an upward price trend that joins with the existing up trend? That is the trading setup that works best. Trade with the tend. The candle appears as a downward retracement in an upward price trend. Look for that setup and be rewarded.

-- Thomas Bulkowski

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See Also

• The tweezers bottom has matching low prices.
• Tall candles show support and resistance.
• Two candlestick tips could improve profitability.
• Candles near the yearly low perform best.
• Chart pattern breakouts: Which candlesticks appear most often the day before breakouts?
• Shadows. Do tall candle shadows predict price turns? Yes and no.
• Tall candles at peaks and valleys. Tall candles appear at turning points.

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