Mat Hold Pattern  and Example

Mat Hold Pattern and Example

A mat hold pattern is a candlestick formation that indicates the continuation of a prior move. They show that the price is moving strongly in the trending direction (candle one), and there is only minor pressure in the opposite direction (candles two through four) before the price starts moving in the trending direction again (candle five). The mat hold pattern is rare. Despite the deviation from the normal--six candles instead of five — the overall pattern shows a strong price rise, a pullback, and then a strong surge in the trending direction at the end of the pattern. A bullish pattern starts with a large upward candle followed by a gap higher and three smaller candles that move lower. The bullish version is a large up candle, a gap higher follow by three smaller down candles, and then a large up candle.

What is a Mat Hold Pattern?

A mat hold pattern is a candlestick formation that indicates the continuation of a prior move.

There can be bearish or bullish mat hold patterns. A bullish pattern starts with a large upward candle followed by a gap higher and three smaller candles that move lower. These candles must stay above the low of the first candle. The fifth candle is a large candle that moves to the upside again. The pattern occurs within an overall uptrend.

The bearish version is the same, except candles one and five are large down candles, and candles two through four are smaller and move to the upside. These candles must stay below the high of the first candle. The pattern completes with a long candle to the downside, candle five. It must occur within a downtrend.

Key Takeways

What the Mat Hold Pattern Pattern Tells You

When the bullish mat hold pattern occurs within an uptrend it signals that the uptrend is likely resuming to upside. Traders may opt to buy near the close of the fifth candle (large up candle) or enter a long trade on the following candle. A stop loss is typically placed below the low of the fifth candle.

When a bearish mat hold pattern occurs within a downtrend, it indicates the downtrend is likely resuming and prices will continue to fall. Traders may opt to sell or short near the close of the fifth or on the following candle. A stop loss on short positions is placed above the high of the fifth candle.

Both versions of the pattern are quite rare. They show that the price is moving strongly in the trending direction (candle one), and there is only minor pressure in the opposite direction (candles two through four) before the price starts moving in the trending direction again (candle five).

Example of the Mat Hold Pattern

The mat hold pattern is rare. Therefore, traders may allow for tiny deviations in the pattern as long as the overall premise of the pattern remains in tact.

The following pattern in Alphabet Inc. (GOOG) starts off with a strong upward candle in an overall uptrend. This is followed by four candles that stay above the low of the first. The bullish pattern typically only has three candles that move to the downside. The pattern is followed by a further rise to the upside, although in this case it is short-lived.

Despite the deviation from the normal--six candles instead of five — the overall pattern shows a strong price rise, a pullback, and then a strong surge in the trending direction at the end of the pattern.

bullish mat hold pattern with four down candles instead of three

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Each trader will need to determine if they will allow for slight deviations in the pattern or not.

What is the Difference Between a Mat Hold and a Rising Three Pattern

A rising three pattern is very similar except there isn't a gap following the first candle. This pattern also not very common.

Limitations of the Mat Hold Pattern

The mat hold pattern is hard to find. It occurs infrequently, and the price doesn't always move as expected following the pattern.

There is no profit target for the mat hold pattern. If the price does move as expected, the pattern doesn't indicate how far the price could run. This will require another method, such as trend analysis or technical indicators to determine an exit, or possibly another candlestick pattern.

The mat hold pattern is typically best used in conjunction with other forms of analysis, as it may be unreliable if traded solely on its own.

Related terms:

Candlestick

A candlestick is a type of price chart that displays the high, low, open, and closing prices of a security for a specific period and originated from Japan. read more

Counterattack Lines and Example

Counterattack lines are two-candle reversal patterns that appear on candlestick charts. There are both bullish and bearish versions. read more

Gap

A gap is an area on a technical chart where an asset's price jumps higher or lower from the previous day’s close. read more

Harami Cross and Example

A harami cross is a candlestick pattern that consists of a large candlestick followed by a doji. Sometimes it signals the start of a trend reversal. read more

Ladder Bottom/Top

Ladder bottom/top are reversal patterns composed of five candlesticks that may also act as continuation patterns. read more

Long Position

A long position conveys bullish intent as an investor will purchase the security with the hope that it will increase in value. read more

Modified Hikkake Pattern

The modified hikkake pattern is a rare variant of the basic hikkake that is used to signal reversals. It contains more candles/price bars than the basic hikkake. read more

On Neck Pattern and Example

The on neck candlestick pattern theoretically signals the continuation of a downtrend, although it can also result in a short-term reversal to the upside. read more

Profit Target

A profit target is a predetermined point at which an investor will exit a trade in a profitable position.  read more

Rising Three Methods

"Rising three methods" is a bullish continuation candlestick pattern that occurs in an uptrend and whose conclusion sees a resumption of that trend. read more