Matching Highs Lows

Matching Highs/Lows Pattern

Matching Highs and Matching Lows patterns occur at market bottoms and tops. Prices form key support and resistance areas at certain price ranges, and attempt to break these levels for at least 3 bars in a row. When the prices fail to break these levels, they form "matching lows" and matching high patterns for a minimum of 3 bars, and these "matching highs" or "matching lows" may signal a potential trend reversals. These patterns are more effective in daily and weekly charts. Intra-day tick charts with higher tick counts or time-frames are used when finding reliable matching high/low patterns.

Trade:

Trades are taken in the opposite direction prior to the matching highs/lows pattern. After a "matching lows" pattern, a "long" trade may be entered above the high of the breakout bar. For a matching highs pattern, a "short" trade is entered below the low of the breakdown bar.

Stop:

Place a "stop" order below the low of the pattern for a "matching lows" pattern. For a matching highs pattern, place a "stop" order above the high of the pattern.

Target:

Targets are placed from the trade entry in multiples of length of the breakout bar. For a long entry, place the first target at the length of the breakout bar above the entry, and the second target is set at twice the length of the breakout bar above the entry. For short entry, place the first target at length of the breakout bar below the entry level, and the second target is set at twice the length of breakout bar below the entry.

Matching Highs

Matching Lows

Trading Matching Highs Pattern

4/5/0710:02 AM

Matching Highs

Depth

Short

Target

Target

Source: lYad&Station

815.00

814.00

813.001

812.00:

811.00

810.00

809.00

808.00!

807.00

11:52

13:39

15:28 3/27

10:02

10:43

Trading Matching Highs Pattern

The example above illustrates a "Matching Highs" pattern from the Russell Emini futures (ER2) 610 tick chart. On March 26, 2007, ER2 rallied most of the day to form a top at the 815.5 area. Late in the afternoon, Russell formed a Matching Highs pattern for a series of bars to suggest a potential short trade.

1. Enter a "short" trade below the low of the breakdown bar at 813.6.

2. The length of the breakdown bar is measured at 1.6 points.

3. Set a profit target at 812 (length of the breakdown bar) and 810.4.

4. Place a "stop" order above the high of the pattern at 815.5.

Trading Matching Lows Pattern

4/5/0711:17 AM

Target

818.50

818.00

-Long

Depth

«.Matching Lows

Source; Trade Station

817.00

816.50

816.00

815.50

814.50

814.00;

813.50!

Trading Matching Lows Pattern

The chart above illustrates an example of a Matching Lows pattern from the Russell Emini futures (ER2) 610 tick chart. On April 5, 2007, during the morning trading, ER2 formed a matching lows pattern at 815 area to suggest a potential long trade. Wait for a breakout bar to confirm higher highs before placing a trade.

1. Enter a "long" trade one-tick above the breakout bar's high at 816.3.

2. The length of the breakout bar is 0.8 points.

3. Set targets at 817.1 (length of the bar) and 818.

4. Place a "stop" order below the low of the matching low pattern at 815.1.

Fantastic Futures

Fantastic Futures

Get All The Support And Guidance You Need To Be A Success At Futures Trading!This Book Is One Of The Most Valuable Resources In The World When It Comes To Futures Trading For The Common Guy.

Get My Free Ebook


Post a comment