As of 10/29/2020
  Indus: 26,659 +139.16 +0.5%  
  Trans: 11,184 +237.90 +2.2%  
  Utils: 868 +2.32 +0.3%  
  Nasdaq: 11,186 +180.72 +1.6%  
  S&P 500: 3,310 +39.08 +1.2%  
YTD
-6.6%  
 +2.6%  
-1.3%  
 +24.7%  
 +2.5%  
  Targets    Overview: 09/29/2020  
  Up arrow29,300 or 27,400 by 11/01/2020
  Up arrow12,000 or 11,000 by 11/01/2020
  Up arrow915 or 840 by 11/01/2020
  Up arrow12,800 or 11,300 by 11/01/2020
  Up arrow3,700 or 3,400 by 11/01/2020
CPI (updated daily): Arrows on 10/23/20
As of 10/29/2020
  Indus: 26,659 +139.16 +0.5%  
  Trans: 11,184 +237.90 +2.2%  
  Utils: 868 +2.32 +0.3%  
  Nasdaq: 11,186 +180.72 +1.6%  
  S&P 500: 3,310 +39.08 +1.2%  
YTD
-6.6%  
 +2.6%  
-1.3%  
 +24.7%  
 +2.5%  
  Targets    Overview: 09/29/2020  
  Up arrow29,300 or 27,400 by 11/01/2020
  Up arrow12,000 or 11,000 by 11/01/2020
  Up arrow915 or 840 by 11/01/2020
  Up arrow12,800 or 11,300 by 11/01/2020
  Up arrow3,700 or 3,400 by 11/01/2020
CPI (updated daily): Arrows on 10/23/20

Bulkowski on the Mat Hold Candle Pattern

 

In my book, Encyclopedia of Candlestick ChartsEncyclopedia of Candlestick Charts book., 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.

I had to use the List feature of Patternz to find this rare candlestick in the many years of data held in my database. During writing of the book, I uncovered just 52 mat hold patterns out of 4.7 million candle lines. Wow. Thus the performance numbers I discuss here will likely be wrong or at least subject to large change as additional samples become available.

Important Results
Discussion
Identification Guidelines
Three Trading Tidbits
Example
See Also

Mat Hold Candlestick: Important Results

Theoretical performance: Bullish continuation
Tested performance: Bullish continuation 78% of the time
Frequency rank: 93
Overall performance rank: 86
Best percentage meeting price target: 67% (bull market, down breakout)
Best average move in 10 days: -7.21% (bull market, down breakout)
Best 10-day performance rank: 2 (bull market, down 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.

The ideal mat hold candlestick
Mat Hold

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Mat Hold Candlestick: Discussion

The mat hold candle, as I mentioned, is rare (ranks 93 out of 103 where 1 is most plentiful), so the numbers are likely to change. It acts as a bullish continuation candlestick in both theory and reality with price continuing the trend 78% of the time. Unfortunately, the performance rank is low, at 86, meaning that the average move over the coming 10 days is small. There are exceptions to this with the 7.21% drop after a downward breakout in a bull market. That decline ranks 2 out of 103 candle types where 1 is best. My guess is that with more samples, the mat hold pattern would not perform nearly as well.

Mat Hold Candlestick: Identification Guidelines

CharacteristicDiscussion
Number of candle linesFive
Price trend leading to the patternUpward.
ConfigurationLook for a tall white candle to start the pattern. The next day a small black candle has a higher close. The third day can be any color but it is also a small candle. The fourth day is, again, a small black candle and all three candles (days 2 to 4) show a downward price trend but their bodies remain above the low of the first day. The last day is another tall white candle with a close above the high of the prior four candles.

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Mat Hold 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. After the mat hold completes, expect a price reversal -- page 554 and 558.
  2. Mat hold candles taller than the median show price that moves farther that do those shorter than the median -- page 556.
  3. Expect an upward breakout -- page 558.

Mat Hold Candlestick: Example

The mat hold candlestick on the daily scale

The chart shows an almost perfect example of a mat hold candlestick pattern beginning with the upward price trend leading to the start of the pattern. The first candle is a tall white one followed by three small black candles, of which all trend lower, and another tall white candle completes the pattern.

One flaw, if you can call it that, is the downward breakout. That occurs when price closes below the low of the candle pattern, and I show the breakout price as a greenline. Price closes below the line for a day before making a straight-line run upward.

As I mentioned in the Three Trading Tidbits (above), expect a price reversal after the mat hold completes. We see that behavior here. Price trends upward leading to the mat hold and when the candle completes, price falls -- not much, but it is enough to cause a downward breakout.

-- Thomas Bulkowski

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See Also

 

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My novels:  Bumper's Story Head's Law

Chart Patterns: After the Buy Getting Started in Chart Patterns, Second Edition Trading Basics Fundamental Analysis and Position Trading Swing and Day Trading Visual Guide to Chart Patterns Encyclopedia of Candlestick Charts Encyclopedia of Chart Patterns 2nd Edition Trading Classic Chart Patterns

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