What Is an Upside Tasuki Gap?
Let me explain the Upside Tasuki Gap directly: it's a three-bar candlestick pattern that signals the continuation of an uptrend, starting with a gap up and followed by a partial retracement.
You see it as a three-bar formation commonly used to indicate the trend will keep going. The first bar is a large white or green candlestick in a clear uptrend. The second is another white or green candlestick that opens with a gap above the previous close. The third is a black or red candlestick that partially fills the gap between the first two.
Key Takeaways
- The Upside Tasuki Gap is a three-bar candlestick formation that signals the continuation of the current uptrend.
- The Upside Tasuki Gap’s third candle partially closes the gap between the first two bars.
- Traders often use other gap patterns in conjunction with the Upside Tasuki gap to confirm bullish price action.
Understanding the Upside Tasuki Gap
I want you to understand how this pattern works: the Upside Tasuki Gap shows the strength of an uptrend through the gap in the second candle and the rising price. The third candle marks a brief pause where bears try to push the price down but fail to close the gap fully. This failure suggests the uptrend will continue.
You might hear it called a Bullish Tasuki Gap or Upward Gap Tasuki. The opposite, in a bearish market, is the Downward Tasuki Gap. These patterns come from Japanese technical analysis.
This is one of many gap patterns in a bullish trend. You should use supporting uptrend gap patterns with it to confirm a bullish strategy.
Gaps are big price jumps from one day to the next. They often form over two to three days, and it's common for prices to fill those gaps later. Sometimes prices rise too fast, leading to a small pullback. The black or red candle in this pattern is that minor consolidation before bulls push higher again.
Upside Tasuki Gap Within an Uptrend
You can spot Upside Tasuki Gaps anywhere in a bullish trend. Bullish patterns usually start with a breakaway gap for reversal, then runaway gaps, and end with an exhaustion gap. As prices trend up, they form an ascending channel. You draw this by connecting upward-sloping lines at highs and lows. An Upside Tasuki Gap can fit inside this channel, along with other gaps.
Practical Example of Trading the Tasuki Gap
Consider this example: David sees an Upside Tasuki Gap on the iShares 10+ Year Investment Grade Corporate Bond ETF chart and decides to trade it. He could enter at the close of the third red candle at $62.97, with a stop-loss below the first candlestick's low at $62.08. Or, he might set a buy stop above the second candlestick's high at $63.39 to confirm the uptrend, with a stop under the third candlestick's low at $62.93.
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