Bullish mat hold is commonly mistaken as only a five candlestick formation. In a simple word, it is a chart pattern that shows small market corrections after an up move and yet hold the profit zones before the final candle continues the trend of the first day by pushing the price higher and continue the movement of the first day.
For instance, If you see the chart of Emudhra, you will realize after the initial spurt in the price of the stock there were small corrections and yet the stock manage to hold the initial price of 239. The smaller corrections can also be called as Time correction. However, to confirm a pullback certain indicators can be used like.
1. Use Fibonacci retracement levels to set entry level, stop loss and take profit
Keep in mind that one of the flaws of the Mat Hold pattern is that it requires other tools to get a good entry-level placement and set stop loss and taking profit targets. For that purpose, using Fibonacci support and resistance levels could solve this problem. Incase, you don't have the continuing chart like in case of Emudra in this case the entry point will be ideally be at the 23.6% or 0.0% levels, and take profit is set at 61.8% or 78.6% Fib levels.
2. Use RSI Stochastic
This indicator is a leading indicator which can really help in estimating the time of reversal and continuation of long trend. While the charts indicates that they are holding the initial long position, RSI Stoch will be indicating the oversold zone with value dropping below 0.20 that will be a kind of diversion signal stating the stock is ready for reversal to its original trend.
In Nutshell.
1. The Mat Hold continuation pattern is a signals the existing trend is likely to continue
2. To trade the Mat Hold pattern, a trader must wait until the last candle is completed and closes above the previous small candles
3. Set up RSI Stochastic to determine the entry level, an oversold signal after the small negative continuing candles will help in early entry in the stock.
4. Setting stop loss and take profit orders requires a trader to use Fibonacci retracement levels
For instance, If you see the chart of Emudhra, you will realize after the initial spurt in the price of the stock there were small corrections and yet the stock manage to hold the initial price of 239. The smaller corrections can also be called as Time correction. However, to confirm a pullback certain indicators can be used like.
1. Use Fibonacci retracement levels to set entry level, stop loss and take profit
Keep in mind that one of the flaws of the Mat Hold pattern is that it requires other tools to get a good entry-level placement and set stop loss and taking profit targets. For that purpose, using Fibonacci support and resistance levels could solve this problem. Incase, you don't have the continuing chart like in case of Emudra in this case the entry point will be ideally be at the 23.6% or 0.0% levels, and take profit is set at 61.8% or 78.6% Fib levels.
2. Use RSI Stochastic
This indicator is a leading indicator which can really help in estimating the time of reversal and continuation of long trend. While the charts indicates that they are holding the initial long position, RSI Stoch will be indicating the oversold zone with value dropping below 0.20 that will be a kind of diversion signal stating the stock is ready for reversal to its original trend.
In Nutshell.
1. The Mat Hold continuation pattern is a signals the existing trend is likely to continue
2. To trade the Mat Hold pattern, a trader must wait until the last candle is completed and closes above the previous small candles
3. Set up RSI Stochastic to determine the entry level, an oversold signal after the small negative continuing candles will help in early entry in the stock.
4. Setting stop loss and take profit orders requires a trader to use Fibonacci retracement levels
