What Is Up/Down Gap Side-by-Side White Lines?

What Is Up/Down Gap Side-by-Side White Lines?

Let me explain the up/down gap side-by-side white lines to you directly: it's a three-candle continuation pattern that shows up on candlestick charts. You need to recognize it as a signal that the current trend is likely to keep going.

Key Takeaways

This pattern involves three candles and serves as a continuation indicator on candlestick charts. For the up version, you see a white candle, then a gap up, followed by two white candles of similar size. The down version starts with a black candle, a gap down, and then two white candles of similar size. Expect the price to continue in the direction of the first candle's trend after this pattern appears. It has moderate reliability for trend continuation, but the subsequent price move is often subdued, so it's not a standout pattern in terms of significance.

Understanding Up/Down Gap Side-by-Side White Lines

The up version features a large white or green candle, followed by a gap, and then two more white candles that are similar in size to each other. For the down version, it's a large black or red candle, followed by two white candles of similar size. When you spot this rare pattern, the price should continue in the current trend direction, whether up or down.

Let me break down the up gap side-by-side white lines as a bullish continuation pattern: it happens in an uptrend, starting with a white candle, then the second candle opens above the first's close with a gap up, and the third candle has a real body matching the second's length, opening at or above the first candle's real body level.

Now, for the down gap side-by-side white lines as a bearish continuation pattern: it occurs in a downtrend, beginning with a black candle, followed by a white candle opening below the first's close with a gap down, and then a third white candle with a real body matching the second's, opening at or below the first candle's real body level.

This pattern is moderately accurate for predicting trend continuation, but it's uncommon, with continuation happening 66% of the time. It doesn't always lead to big price moves; over 60% of patterns in downtrends with downside breakouts averaged a 6% move in 10 days, per Thomas Bulkowski's research, while other contexts showed smaller moves. You should use other chart patterns or technical indicators to confirm this candlestick pattern and improve your success odds.

Many traders wait for confirmation, which means price movement aligning with the pattern's expectation. For instance, after an up gap pattern, you might wait for the price to break above the pattern's highs before going long, and place a stop loss below the low of the second or third candle, or even the first for more room.

Don't confuse this with the three outside up/down pattern, which is a reversal, not continuation: the outside up has a black candle followed by two white ones, and the outside down has a white candle followed by two black ones.

Up/Down Gap Side-by-Side White Lines Psychology

For the up version, imagine a security in an uptrend where bulls are confident for higher prices. The first candle rallies with a large real body closing higher than the open. The second candle gaps up, boosting bull confidence with positive action holding a higher high to close. The third candle tests bulls by opening lower into the second's open, but buyers push it back to the second's high, showing weakening bears and increasing chances for a new high next.

For the down version, picture a downtrend with bears expecting lower prices. The first candle sells off with a large real body closing lower than the open. The second candle gaps down but closes higher with strong action below the gap. The third candle opens with a gap down into the second's open, and again, action fails to break gap resistance, indicating fading bull power and higher odds for a new low next.

Up Gap Side-by-Side White Lines Example

Take the Apple Inc. (AAPL) daily chart as an example of the up gap version. After a swing low, there's a large up candle, a gap, and two side-by-side up candles. The next day, the price rallies above the highs of the second and third candles, confirming the uptrend continuation. The rally goes on for a few days before sideways drift.

Up/Down Gap Side-by-Side White Lines Limitations

This pattern is rare, so opportunities to spot and trade it are limited. Its reliability is moderate, so pair it with other analysis and signals for confirmation. The down gap version in downtrends tends to produce larger moves as a continuation. Remember, candlestick patterns like this don't give price targets; you decide exits, and waiting for confirmation is key.