An Upside Tasuki Gap is a three-bar candlestick formation that signals the continuation of the current bullish 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 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.
Key Takeaways
- The Upside Tasuki Gap is a three-bar candlestick pattern indicating the continuation of the current uptrend.
- The third candle partially closes the gap between the first two bars, confirming buying momentum.
- Experienced traders often combine multiple gap patterns with the Upside Tasuki Gap to reinforce bullish price action.
Image by Julie Bang
Harnessing the Power of the Upside Tasuki Gap
The Upside Tasuki Gap illustrates the strength of an uptrend through the gap opening of the pattern’s second candle and the ascension in price. The pattern’s third candle represents a brief phase where bears attempt to lower the price but fail to close the initial gap, signifying the likely continuation of the upwards momentum.
Traders may also know this pattern as a Bullish Tasuki Gap or the Upward Gap Tasuki. Its bearish counterpart is referred to as a Downward Tasuki Gap. These patterns are believed to have roots in Japanese technical analysis.
The Upside Tasuki Gap is one among numerous gap patterns that can emerge in a bullish market. Traders often use complementary gap patterns to bolster a bullish trading strategy and add confirmation.
Typical Gap Pattern Dynamics
Gaps signify significant price changes usually occurring from one trading day to the next. These patterns typically span two to three days of trading. Occasionally, a minor pullback or consolidation occurs when prices are driven too quickly upwards; this is where the black/red candlestick acts like a consolidation phase before bulls drive the price higher again.
Upside Tasuki Gap: A Stable Pillar in an Uptrend
Upside Tasuki Gaps can arise anytime during an upward trend. Bullish trends often exhibit a progression beginning with a breakaway gap signaling a reversal, followed by runaway gaps and leading to an exhaustion gap. As asset prices rise, an ascending channel frequently forms, demarcated by two upward-sloping lines drawn at peak and trough levels. An Upside Tasuki Gap may emerge within this channel, alongside various other gap patterns.
Practical Example: Navigating the Tasuki Gap
David identifies an Upside Tasuki Gap on the iShares 10+ Year Investment Grade Corporate Bond ETF chart. He plans to leverage this pattern for trade entry and defining his risk parameters. David might execute a trade upon the third red candle’s close at $62.97, placing a stop-loss beneath the first candlestick’s low at $62.08. Alternatively, David could set a buy stop order slightly above the second candlestick’s high at $63.39, verifying the uptrend’s continuation and set his stop under the third candle’s low at $62.93.
StockCharts.com.
Mastering the Upside Tasuki Gap empowers traders to make informed decisions, leveraging this predictable pattern to bolster their trading strategy during bullish market trends.
Related Terms: Downside Tasuki Gap, Bullish Tasuki Gap, Gap Trading, Uptrend, Candlestick Patterns.
