- Sentiment: Bearish
- No. of candles: 3
- Direction: Continuation
What Is The Downside Tasuki Gap Japanese Candlestick Pattern?
The Downside Tasuki Gap pattern is a bearish continuation pattern that typically forms during a downtrend.
The Japanese candlestick pattern consists of three candles.
The first two candles are long black (bearish) candles, and the third candle is a white (bullish) candle that opens within the second candle’s real body and closes below the second candle’s low, leaving a gap between the second and third candles.
What Is The Psychology Behind The Bullish Downside Tasuki Gap Pattern?
The Downside Tasuki Gap pattern reflects a continuation of the prevailing downtrend. During the period of the first black candle, sellers are in control and push the price lower.
The selling pressure continues during the period of the second black candle, indicating a strong bearish sentiment.
However, during the period of the third white candle, buyers may attempt to push the price higher, but the selling pressure from the second candle is too strong, preventing the price from closing above the second candle’s low.
The gap between the second and third candles indicates a lack of bullish momentum, suggesting that the bears are still in control.
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How To Trade The Downside Tasuki Gap Reversal Pattern?
To trade the Downside Tasuki Gap pattern, wait for confirmation by a subsequent bearish candle or another technical indicator.
The sell trigger occurs when the price moves and closes below the low of the third white candle, confirming the pattern.
Place a stop loss order above the high of the third white candle to protect against potential false breakouts or reversals.
As the price moves in your favor, consider using trailing stops or other risk management techniques to lock in profits and minimize potential losses.
Additional Tips
While the Downside Tasuki Gap pattern can be a reliable bearish continuation signal, it is essential to use it in conjunction with other technical indicators and chart patterns to confirm the trend continuation.
Additionally, be aware of the overall market context and consider factors such as support and resistance levels, as well as the strength of the prevailing trend.
Keep in mind that no single pattern can guarantee a trend continuation, and proper risk management is always necessary.
Continue to learn about Japanese candlesticks through books, such as Steve Nison’s “Japanese Candlestick Charting Techniques” and “Beyond Candlesticks.”
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