Upside Tasuki Gap
An Upside Tasuki Gap is a three-bar candlestick formation that is commonly used to signal the continuation of the current trend.
- The first bar is a large white/green candlestick within a defined uptrend.
- The second bar is another white/green candlestick with an opening price that has gapped above the close of the previous bar.
- The third bar is a black/red candlestick that partially closes the gap between the first two bars.
Upside Tasuki Gap is a candlestick pattern consisting of three candles, typically used to indicate the continuation of the current trend.
Definition
The Upside Tasuki Gap is a technical analysis pattern that usually appears in an uptrend and consists of three candlesticks. It suggests that the market is likely to continue rising.
Origin
This pattern originates from Japanese candlestick charting techniques, first invented and used by Japanese rice traders in the 18th century. Candlestick charting was later widely adopted in Western financial markets, leading to the development of various pattern analysis methods.
Categories and Characteristics
- The first candlestick is a large bullish candle (white/green) in a clear uptrend.
- The second candlestick is another bullish candle (white/green) that opens above the close of the first candle, creating a gap.
- The third candlestick is a bearish candle (black/red) that partially fills the gap between the first two candles.
The characteristics of this pattern include the gap created by the second candle and the pullback of the third candle, indicating short-term market hesitation but an overall bullish trend.
Specific Cases
Case 1: In an uptrend of a particular stock, the first day closes with a large bullish candle, the second day opens above the previous day's close, creating a gap, and the third day shows a bearish candle that partially fills the gap. Investors might interpret this as a short-term pullback but expect the overall trend to continue upward.
Case 2: In the forex market, a currency pair in an uptrend forms an Upside Tasuki Gap pattern. The first day is a large bullish candle, the second day gaps up, and the third day shows a bearish candle that partially fills the gap. Traders might consider holding long positions, expecting the market to continue rising.
Common Questions
Q1: Does the market always continue to rise after an Upside Tasuki Gap pattern appears?
A1: Not necessarily. While this pattern suggests a potential continuation of the uptrend, it should be analyzed in conjunction with other technical indicators and market conditions.
Q2: How can I distinguish an Upside Tasuki Gap from other similar patterns?
A2: The key features are the gap created by the second candle and the pullback of the third candle. Other patterns may not have these characteristics.
