- Sentiment: Bullish
- No. of candles: 3
- Direction: Continuation
What Is The Upside Tasuki Gap Japanese Candlestick Pattern?
The Upside Tasuki Gap pattern is a bullish continuation pattern that typically forms during an uptrend.
The Japanese candlestick pattern consists of three candles.
The first candle is a bullish candle, indicating strong buying pressure.
The second candle is also a bullish candle that gaps up from the first candle, creating a gap between the two candles’ bodies, and indicating a continuation of the bullish momentum.
The third candle is a bearish candle that opens within the body of the second candle and closes within the gap between the first and second candles, but does not fill the gap completely.
What Is The Psychology Behind The Bullish Upside Tasuki Gap Pattern?
The Upside Tasuki Gap pattern reflects a continuation of bullish sentiment in the market.
The initial bullish candle, followed by another bullish candle with a gap up, signifies that buyers are in control and are pushing the price higher.
The third bearish candle represents a temporary profit-taking or a pause in the bullish trend but does not fill the gap, indicating that the selling pressure is not strong enough to reverse the uptrend, and the bullish sentiment may continue.
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How To Trade The Upside Tasuki Gap Reversal Pattern?
To trade the Upside Tasuki Gap pattern, wait for confirmation by the third candle.
The buy trigger occurs when the price moves and closes above the high of the third candle, confirming the continuation of the bullish trend.
Place a stop loss order below the low of the third candle or below the low of the first candle, depending on your risk tolerance, to protect against potential trend 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 Upside Tasuki Gap pattern can be a reliable bullish 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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