Upside Tasuki Gap

The upside tasuki gap is a bullish continuation trend and is the result of temporary profit taking in a strong upward market. In other words it indicates a continuation of a prevailing trend, even after a correction day, and it is considered to be a rare pattern. This pattern is considered to be similar to the bullish upside gap three method pattern expect that the bullish upside gap three method pattern includes a gap that is made between the first two days, and it is filled in on the third day.

In order to qualify as an upside tasuki gap pattern, certain conditions must be met. First, the market must be in a significant uptrend. Second, there should be two long white bullish candlesticks with a gap between them. Third, there should be a black candlestick on the third day and it should open within the body of the second day’s candle. This third day should be bearish and this candle should also close within the gap formed between the first and second candlesticks.

What does this pattern indicate is occurring in the markets?
This continuation pattern occurs when buying pressure is more than selling pressure. On the third day referred to as the correction day, the bearish black candlestick opens well into the body of the second day’s white candlestick and partially fills the gap. This indicates a temporary stop of the current trend. This partially filled gap indicates to investors that sellers have not yet gained control of the market and the upward trend will continue. What this means to investors is that the profit taking is only temporary.

Confirmation of the upside tasuki gap pattern occurs in the form of a white candlestick on the fourth day, or a large gap up, or a higher close. Also, if the gap is filled completely by the third day’s candlestick, then the pattern is considered to be a very weak indicator of a continuing trend. The chance of a reversal also increases significantly.

Japanese Candlesticks are the fastest way for new investors to quickly and accurately read stock charts. Once you are comfortable with the major candlestick signals, and you have learned how to read stock charts continue to expand your expertise by learning the various secondary Candlestick Patterns . Combine these with your favorite technical analysis indicators, such as the moving average , and you have the perfect trading arsenal for evaluating stocks, currencies, commodities, or exchange traded funds .

Continue your candlestick continuation patterns education and read about the downside tasuki gap pattern.