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Bearish Mat Hold Candlestick Pattern Explained- (Trading Strategy and Backtest | Definition & Meaning)

Last Updated on 10 February, 2024 by Trading System

Candlestick patterns are some of the most popular ways to analyze the price of a market. And with their unique shapes, they tell different stories about the forces that formed the market action. One such candlestick pattern is the bearish mat hold.

Bearish mat hold is a five candle bearish continuation pattern that forms in a bearish trend, and signals that the market is making a temporary pause, after which it’s expected to continue down.

In this article, you’ll learn everything you need to know about the bearish mat hold candlestick pattern. We’ll cover its meaning, definition, and show you some of our best ways to improve its performance.

Let’s start!

Bearish Mat Hold Definition

Bearish Mat Hold
Bearish Mat Hold

A bearish mat hold consists of five candlesticks, with the first and fifth being negative, while the three intervening candles are positive.

Here is the exact definition of a bearish mat hold:

  1. The first candle is tall and bearish, and part of the ongoing bearish trend.
  2. The second, third, and fourth candles are quite small and bullish.
  3. The fifth, last candle is big and bearish, and closes below the low of the pattern.

The traditional view of the pattern is that it signals a temporary pullback in the bearish trend. Thus, the market is expected to continue down after a bearish mat hold.

Bearish Mat Hold Vs Falling Three Methods

Those of you who have heard of the falling three methods pattern might be a little confused by now since it closely resembles the bearish mat hold.

However, while the two patterns are very similar, there is one key difference.

While the three bullish candles of a falling three methods must be confined within the range of the first bearish candle, that doesn’t apply to the bearish mat hold. There the three candles may form outside the first candle’s range.

Below you see images of the two patterns. Notice how one of the three bullish candles of the bearish mat hold forms outside the range of the first candle!

Bearish Mat Hold
Bearish Mat Hold
Falling Three Methods
Falling Three Methods

Bearish Mat Hold Meaning: What Does it Tell Us About The Market?

All candlestick patterns hold different meanings about the market and the forces that lead to them forming.

And as traders, we may extract quite a lot of valuable information about the current state of a market, that could help us in our analysis of the market.

Now, it’s nearly impossible to know exactly why a market moved as it did. However, as traders, we should expose ourselves to market data to improve our understanding of the market. In fact, we ourselves study market data quite a bit to get ideas for new trading strategies.

So, what does a bearish mat hold tell us about the market?

Well, since the market is in a negative trend, most market participants have a negative outlook and believe that it’s headed for lower prices. Following this, selling pressure prevails, and the market forms the first negative candle of the bearish mat hold.

Now, having gone down for quite some time, the market is becoming oversold, which increases the chances of a pullback being imminent.

Upon realizing this, market participants stop issuing sell orders in anticipation of the coming pullback. This, in turn, gives way for the bullish market participants and their buy orders, which drives the market upwards for the coming three bars.

Now, even though the market has managed to produce three positive candles, they were quite short and insignificant. This signals that bears still are in control, and that bulls are weak.

As the market produces the last, bearish candle, it confirms that what we saw was nothing but a temporary pullback, and that the market now is headed lower.

Bearish Mat Hold Example

Here follow a real-world example of the bearish mat hold pattern:

Bearish Mat Hold Example
Bearish Mat Hold Example

How to Trade the Bearish Mat Hold: How to Improve the Pattern for Live Trading

When some beginning traders get to know about patterns and strategies like the bearish mat hold, they start trading immediately. However, as most experienced traders know, most patterns don’t work that well without additional filters and conditions that increase the win rate or win size.

Now, in addition to having the right filters and conditions, you also need to ensure that you trade the pattern on a market and timeframe where it works well! Even though candlestick patterns are believed to work well in most markets, that seldom is the case. You need to focus on the markets and timeframes that show the most merit, in order to have a chance as a trader. We recommend that you use backtesting to find out where a pattern works or not!

Having said this, we wanted to show you two categories of filters that tend to work quite well. These are filters that we use in the strategies we trade ourselves and have found useful across many markets!

Let’s start!

Volatility Filters

Some of the most versatile filters are volatility filters. This is not too strange, considering that everything that moves will be more or less volatile at different times.

Now, if we measure the volatility of the market we’re working with, we may find that the bearish mat hold works worse or better in high or low volatility conditions. And if we find such a connection, we may decide to only take trades when the bearish mat hold is most likely to work out well.

So, how do you measure volatility?

Well, one very good approach, is to use the ATR indicator.

ATR, or Average True Range measures the average true range of the last bars, which gives you a nice reference value. You may then use this value to compare against the range of the current or last few bars. If the true ranges for the last bars are lower than the ATR, then volatility is low, and the other way around.

Another effective way to measure volatility, is to use ADX. Being one of our favorite indicators, ADX measures the strength of the trend, where readings above 25 are considered signs of a strong trend, while readings below 20 are thought to signal an indecisive market.

Our complete guide to ADX goes into more depth on how to use ADX in trading!

Oversold and Overbought Market Conditions

Some markets like equities and stocks tend to revert to their mean. This basically means that they tend to perform exaggerated moves in either direction, which are corrected by moves in the opposite direction.

Now, by defining when a market has become oversold and overbought, we may know if a bearish mat hold is more or less likely to work out well.

For example, if the market is becoming very oversold, we may decide to not take a trade, since there is a quite big chance that we’ll soon see a bullish move.

Here are some ways that you could define oversold or overbought conditions:

  1. RSI – RSI is an oscillating trading indicator that outputs values between 0 and 100. Readings below 30 are considered oversold, while readings above 70 are considered overbought.
  2. Stochastic- Stochastic is similar to the RSI, but has a somewhat different calculation, together with an additional component in the form of a signal line. Readings below 20 are believed to signal an oversold market, while the opposite for readings above 80.

Bearish Mat Hold Trading Strategies

Now that you know two powerful ways to improve on a bearish mat hold pattern, it’s time to have a closer look at some example trading strategies that use the pattern.

Just keep in mind that you need to apply the strategies to the right timeframe and market for them to work. Again, the best market and timeframe is best determined with backtesting.

Let’s begin!

Trading Strategy 1: Bearish Mat Hold and Range Conditions

Since the bearish mat hold is a bearish signal but still consists of bullish and bearish candles, it might be relevant to compare the sizes of the different candles.

For example, if you spot a bearish mat hold that forms with bullish candles that are tiny compared to the bearish ones, you may want to take it more seriously. As a matter of fact, bulls showed very little strength and aren’t likely to have what it takes to turn the trend around.

In this strategy example, we’ll require that the range of the first bearish candle is at least twice the size of the biggest bullish candle.


Bearish Mat Hold Candlestick Pattern Explained- (Trading Strategy and Backtest | Definition & Meaning)

So, the rules to go short become:

  1. We have a bearish mat hold
  2. The range of the tallest bullish candle is half the size of the fifth bearish candle or smaller.

Then we exit the trade after 5 bars.

Bearish Mat Hold Trading Strategy
Bearish Mat Hold Trading Strategy

Trading Strategy 2: Bearish Mat Hold

We’ll keep this one quite short, by just adding a volume filter, and require the last bearish candle to occur with at least twice the volume of the preceding bullish bar. That way we see that more volume stood behind the bearish move than the preceding bullish candles.

So the rules become:

  1. There is a bearish mat hold
  2. The volume of the last bearish candle is at least twice that of the preceding bullish candle.

We exit the trade after 5 bars.

Bearish Mat Hold Trading Strategy
Bearish Mat Hold Trading Strategy

Ending Words

In this article, we’ve had a closer look a the bearish mat hold candlestick pattern and how it’s used in trading.

Now, just remember to use backtesting to find out what is worth your time and not! Most technical analysis doesn’t work, and as a trader, you must learn to separate the wheat from the chaff. In that endeavor, backtesting is indispensable!

Here you can find our Candlestick pattern archive with many articles covering the subject.


How is a bearish mat hold pattern defined?

It consists of five candles, with the first and fifth being bearish, while the three in-between are bullish. The first candle is tall and bearish, signaling the ongoing bearish trend, and the last candle is a large bearish one closing below the pattern’s low.

What does a bearish mat hold tell us about the market?

The pattern indicates a temporary pullback in a bearish trend. After a prolonged downtrend, the market becomes oversold, leading to a pause. Bullish participants step in, causing a temporary upward movement. However, the last bearish candle confirms the continuation of the overall bearish trend.

How can traders improve the performance of the bearish mat hold pattern?

Traders can use volatility filters, such as ATR or ADX, to gauge market conditions. Additionally, considering oversold and overbought conditions using indicators like RSI or Stochastic can provide valuable insights. Two strategies are outlined in the content. One involves comparing the sizes of bullish and bearish candles, and the other incorporates a volume filter, requiring the last bearish candle to have at least twice the volume of the preceding bullish candle.

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