Downside Tasuki Gap

The downside tasuki gap is a bearish candlestick pattern. It consists of three different days and will occur during a downtrend.

The first candlestick is a bearish day. This day the bears drive the stock lower. The second day the weakness will continue as the security gaps down and opens lower and moves even down from the open forming another bearish candlestick.

The 3rd and final day of this pattern the security opens up higher than the close of the last day. From here the candlestick moves higher. This candlestick should not fill the gap left between the first and second candlestick.

Why is this important? There is a belief among some traders that a gap will always get filled. If the stock rallied but was unable to fill the gap that could mean there was not enough buyers to push the stock to fill it.

Here is an example of how a downside tasuki gap will appear on a candlestick chart.

If the third candlestick moves higher than the gap or at least fills the gap this might not be a bearish signal. The bottom of the first candlestick can act as resistance, if it breaks through resistance it shows that the bulls are gaining strength and the stock may actually be getting ready to head up.

Other Candlestick Patterns

There are tons of candlestick patterns out there which traders use to help them predict short term stock movements. If you are learning to read these patterns here are a few more to look into.

Bullish Belt Hold - This is a 1 day reversal pattern that consists of one major candlestick

Inverted Hammer - This is a bullish reversal signal that shows an end to a short term downtrend

Falling Three Method - This is a bearish signal that symbolizes a breakout below support