What it looks like
In a fall, a down candle, then a second down candle that opens below the first one's low, leaving a gap (empty space with no trading). The third candle is an up candle that opens inside the second candle's body and closes inside the gap, but not above the first candle's low.
What it means
The fall paused and sellers came straight back. Buyers tried to fill the gap and could not, so the gap still acts as a ceiling. It says the trend is still in charge and the pause was only a rest.
How to trade it
- 1
Confirm the market is already falling. In a sideways market the pattern means nothing.
- 2
Sell when price closes below the pattern's low.
- 3
Put the stop just above the pattern's high.
- 4
Target one to two times the stop distance, or the next floor.
- 5
Example: NAS100 gaps down at the cash open on the 1 hour chart and the pattern spans 90 points. A close below its low triggers a sell with a stop about 95 points away and a target of 95 to 190 points.
A close above the pattern's high.
Where it works best
On markets that gap, such as US30 and NAS100 at the cash open or after a weekend, inside a clear downtrend.
WickSpeak finds the downside tasuki gap automatically on any chart and names it on the candles that made it. It writes what it is, how to trade it and what proves it wrong right on the chart. Playbook can use it, or any of the 146 patterns, as a condition alongside up to 12 conditions on any of 12 timeframes, and backtest the play on past candles with your costs.
Common mistakes
- Treating a gap that has been fully closed as still valid.
- Selling it in a sideways market.
- Expecting to see it often on markets that rarely gap.
Related patterns
Questions traders ask
Is the downside tasuki gap bearish?
Yes. It is a bearish continuation pattern that says a fall paused and is carrying on. It only counts inside an existing downtrend.
How do you trade a downside tasuki gap?
Sell when price closes below the pattern's low, with a stop just above its high. Aim for one to two times the stop distance or the next floor.
What if the up candle closes the gap?
Then the pattern fails its own rule and is not a tasuki gap. The ceiling the gap provided has been taken back by buyers.
What proves the downside tasuki gap wrong?
A close above the pattern's high. Buyers have then taken control of the bounce.