Hello friends, there are a number of auxiliary technical
tools that can help us to be successful in trading in the financial markets.
One of the most useful of these is candlestick analysis. Tasuki Gap is a type
of pattern found in Japanese candle charts. This pattern can often indicate
that a trend will continue, or it can rarely indicate a reversal. In this
article, we will discuss the "Downside Tasuki Gap" candlestick
pattern.
- Topic: Downside Tasuki Gap
- Type: Bearish
- Trend direction: Continuation
- Opposite pattern: Upside Tasuki Gap
Definition
The Downside Tasuki Gap pattern is usually defined as a
formation indicating a continuation of a downward trend. This pattern consists
of three candlesticks and often indicates that a downtrend may continue or strengthen.
First Candle: Long, downward (red or black) body.
Second Candle: Short or long, downward body. It opens below
the body of the first candle, leaving a gap. It forms in red or black.
Third Candle: Short or long, upward (green or white) body.
 |
| Downside Tasuki Gap pattern |
The Downside Tasuki Gap pattern is a formation that creates
bearish expectations in the market. It signals the bearish activity and that
prices could go even lower. This pattern indicates the continuation of the
existing downtrend.
Trading
It is important to gain experience when trading in financial
markets. The Downside Tasuki Gap pattern can be used to create trading
strategies in financial markets, but it should be evaluated in conjunction with
other indicators instead of trading with this pattern alone. The formation of
this pattern can indicate the determination of sellers to drive prices lower.
Sell: When the Downside Tasuki Gap pattern forms, it's
important to anticipate the next candle opening below the second or third
candle. If this new candle moves below the second or third candle, it signifies
bearish dominance and the possibility for further price decline. This situation
can increase the likelihood of the downtrend persisting.
Stop Loss: The stop-loss order is placed above the body of
the second or third candle. Establishing stop-loss levels and minimizing risk
can help control possible losses.
Target: The target can be up to roughly twice the body
length of the Downside Tasuki Gap pattern. This length represents the magnitude
of the downward momentum during the pattern formation. However, when setting a
target, it's crucial to consider not only the size of the pattern but also other
technical indicators, Fibonacci retracement levels, support and resistance
levels, market conditions, and the overall trend. Setting a target should be
done while considering the risk-reward balance of our position.
The example of a trade on the daily chart of the Nasdaq 100
index related to the continuation of the downtrend with the Downside Tasuki Gap
pattern is given below.
 |
| Downside Tasuki Gap on Nasdaq 100 chart |
Keep in mind: Patterns like Downside Tasuki Gap can sometimes be misleading in Forex trading, and a trading strategy based on this formation only can be risky. These patterns can be used to make a more reliable trading decision by evaluating them in conjunction with other indicators and supporting them with general market analysis.