Bullish Matching Low Pattern occurs when two black days appear with equal closes in a downtrend. The pattern is suggestive of a short-term support, and it may cause a reversal on the next day of trading.
Market continues to move down as evidenced by first black candlestick. Next day prices open at a higher level, they then continue to go up during the day but the day closes at a price which is equal to the closing price of the previous day. This pattern suggests a short-term support. Shorts should be aware of this fact. If they ignore Bullish Matching Low Pattern as a possible reversal signal, they may pay for it soon. Two days closing at the same price is indicative of short-term support and this support may be followed by a reversal on the next day of trading.
The reversal of downtrend requires a confirmation on the third day. The confirmation of the trend reversal may be in the form of a white candlestick, a large gap up or a higher close on the next trading day (on the third day).
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