Candlestick patterns are the key technical tool for traders to understand price movements. The patterns formed on candlestick charts over a given time frame offer potential views on trend reversals, continuations, or indecision present in the market. In this article, we will delve into the Bullish Mat Hold candlestick pattern, exploring its meaning, characteristics, and strategies with the example of charts.

Bullish Mat Hold Candlestick Pattern – Definition

The Bullish Mat Hold is a rare and powerful candlestick pattern that signals the continuation of an uptrend. It consists of five candles: a tall and positive first candle, followed by three small, negative candles, and finally, a large and bullish fifth candle that closes above the high of the pattern. 

This pattern indicates that the trend will continue to be bullish, with the three smaller candles representing a temporary pullback or consolidation phase before the trend resumes.

Bullish Mat Hold Candlestick Pattern – Formation

The bullish mat hold pattern is a bullish continuation pattern that can appear in the middle of an existing uptrend. This pattern comprises the following candles:

1. A green(bullish) candle that is a part of the uptrend
2. Next comes a gap up opening above the close of the green candle, followed by three small red candles that close above the opening price of the first green candle
3. A large green candle that closes above the red candles.

This pattern suggests that the buyers have regained control after the slight pullback in the market.

Bullish Mat Hold Candlestick Pattern – Psychology

The Bullish Mat Hold candlestick pattern is a unique formation that reflects the persistence of the bulls in an uptrend.

Here, the first large green candle in the pattern in an uptrend indicates the strong buying pressure in the market. This is followed by a gap-up opening which further emphasizes the control of bulls in the market.

This is followed by three red candles that close above the low of the first green candle, indicating that the bears weren’t able to overcome the bulls in the market. Following this is a large green candle that closes above the prior three red candles. This indicates that the sellers have regained control and the uptrend will likely continue.

Bullish Mat Hold Candlestick Pattern – Trading Ideas

Before the appearance of this pattern, traders should ensure that the previous trend must be an uptrend.

• Entry-  After the formation of the Mat Hold candlestick pattern, traders can take a long position at or just above the close price of the final candle of the pattern.
• Profit Target- Traders can exit the trade when the price of the security reaches near the immediate resistance zone. Once this level is reached, partial profits can be booked in the trade and the remaining position can be held until the next resistance level.
• Stop loss- The stop-loss should be placed below the open price of the fifth candle.

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Bullish Mat Hold Candlestick Pattern – Example

In the above chart of IOC, we can observe the formation of the Bullish Mat Hold pattern in an uptrend. As discussed in this article, the price saw a continuation in uptrend after the formation of the pattern.

At the time of the formation of this pattern, a trader could have taken a long position when the price of the stock started trading above Rs. 33.80  and the stop loss was at Rs.31.67.

Key Characteristics

1. Formation: The pattern is a five-candlestick continuation pattern that forms in the middle of an uptrend.
2. Price Action: The opening price of the second candlestick should be higher than the close of the first candlestick, forming an upward gap.
3. Continuation Signal: The bullish mat hold pattern suggests that the bullish trend is likely to continue, as it demonstrates that buyers are still in control.
4. Confirmation: The fifth candlestick acts as a confirmation of the continuation of the uptrend. 

Conclusion

The bullish mat hold pattern is a key candlestick for traders to identify a potential bullish continuation in security. Understanding its formation, meaning, and trading setup helps traders to make informed trading decisions.

Traders should always confirm the pattern formation in conjunction with other technical tools to avoid false signals. Also, having proper risk management with good risk-reward ratios and practice makes a trader profitable in the long run. 

Written by Deepak

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