Hello dear readers. One of the secrets to mastering the
world of financial trading is the ability to read the markets. This skill can
be developed through various tools and methods, but undoubtedly one of the most
effective methods is understanding Japanese Japanese candlestick patterns. These
patterns teach us the language of markets and provide valuable clues that help
us better understand how and why price movements occur. Today, I will share
some basic information with you about the "San-Ku Triple Gap",
a rare and versatile candlestick formation in financial markets.
- Topic: San-Ku Triple Gap
- Type: two-way
- Trend direction: continuation and reversal
What is the San-Ku Triple Gap candlestick pattern and
what is the structure of this pattern?
San-Ku Triple Gap is a candlestick pattern formation
consisting of multiple candles that can provide information about the continuation or reversal of a trend. As the name
suggests, this pattern includes three consecutive gaps within its structure.
Gaps occur when the price opens and closes above or below the previous closing
price. Accordingly, there are two types of San-Ku Triple Gap patterns:
- Bullish San-Ku Triple Gap
- Bearish San-Ku Triple Gap
If the three gaps are upwards, it is called a Bullish San-Ku
Triple Gap. If the three gaps are downwards, it is known as a Bearish San-Ku
Triple Gap. Regardless of the type of San-Ku pattern, the gaps in the pattern
structure are more important. The candlesticks between the gaps can usually be
one, sometimes two or three. The candles that form the Bullish San-Ku pattern
are usually green, while the candles that form the Bearish San-Ku pattern are
usually red. However, they can also be seen in different colors. What really
matters is the direction of the gaps. In the example image above, you can see
that a single candlestick formed after each gap in the San-Ku Triple Gap
pattern.
What does the name "San-Ku Triple Gap" mean?
The name of the "San-Ku Triple Gap" candlestick
pattern comes from Japanese-origin terms. "San" means
"three" in Japanese, while "Ku" is expressed as
"gap" or "interval." Therefore, the term "San-Ku"
directly means "three gaps" or "triple gap." "Triple
Gap" translates to "three gaps" in English and can be seen as a
translation of the Japanese term. The name "San-Ku Triple Gap"
candlestick pattern formation means "Triple-Gap Candlestick Pattern."
This naming directly refers to the three consecutive price gaps that form the
pattern.
How to use the San-Ku Triple Gap candlestick pattern in
Trading?
San-Ku Triple Gap candlestick pattern is known as a two-way pattern. This means it can signal both a reversal and a continuation of the
prevailing trend in which it forms. It can also sometimes lead to a correction
in the trend. I will now present you with trading examples of both the bullish
and bearish San-Ku Triple Gap candlestick patterns with price chart visuals.
Trading with the Bullish San-Ku Triple Gap:
The Bullish San-Ku Triple Gap occurs during a strong uptrend
and signals that the bullish trend will continue. During this period, bulls
become more aggressive in the market and push prices upward aggressively,
ensuring the continuation of the uptrend. Let's look at a trading example. The
following chart shows a live example of trading with the Bullish San-Ku Triple
Gap candlestick pattern on NVIDIA Corporation stock, showing the continuation
of the bullish trend:
 |
| Bullish San-Ku Triple Gap in NVIDIA stock chart |
The Bullish San-Ku Triple Gap candlestick pattern can also appear
at the end of an uptrend, signaling a trend reversal. This is because the
traders who participated in the rally during the pattern formation get tired
and do not have enough strength to continue the trend. This situation can lead
to a reversal of the trend and a decrease in prices. If prices fall to the
level of the first gap in the pattern, it indicates that a trend reversal has
occurred. Otherwise, there might be a correction within the trend. Let's give a
trading example for this. In the daily chart of Tesla stock below, the Bullish
San-Ku Triple Gap candlestick pattern formed at the end of the uptrend. After
the pattern formation, the market moved sideways. This shows that the bulls
have lost their strength. Later, prices started to fall and a trend reversal
occurred:
 |
| Bullish San-Ku Triple Gap in Tesla stock chart |
Trading with the Bearish San-Ku Triple Gap:
Just like the Bullish San-Ku Triple Gap pattern, the Bearish
San-Ku Triple Gap pattern can also indicate both continuation and reversal of
the trend. However, the Bearish San-Ku Triple Gap pattern usually occurs in a
downtrend, meaning they occur in bear markets. In the Tesla stock chart below,
the Bearish San-Ku Triple Gap pattern is observed at the end of a downtrend,
signaling the beginning of a trend reversal. This means that prices start to
rise. In this trading example you are analyzing, the pattern indicates a trend
reversal signal:
 |
| Bearish San-Ku Triple Gap on Tesla stock chart |
The Bearish San-Ku Triple Gap pattern can also signal the
continuation of the downtrend. As the number of sellers in the market
increases, the price decline continues. You can see this situation in Airbnb
Inc. stock. The Bearish San-Ku Triple Gap pattern formed in the downtrend shows
that the bear trend continues:
 |
| Bearish San-Ku Triple Gap on Airbnb Inc. stock chart |
Entry points for both Bullish San-Ku Triple Gap and Bearish
San-Ku Triple Gap candlestick patterns can be made after the completion of the
pattern formation. The stop-loss level can be set at the opening levels of the
candles where the pattern began to form. Profit targets are typically set to be
the size of the pattern, but they can also be determined using other tools.
Please Note: Price movements in financial markets are always uncertain. Therefore, candlestick patterns like the "San-Ku Triple Gap" can be misleading and may give false signals. Hence, no single Japanese candlestick pattern should be used alone. It must be evaluated in conjunction with other market data and analysis methods.