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
What is a Downside Tasuki Gap Pattern?
The Downside Tasuki Gap is a type of
candlestick pattern that traders use to understand price movements in a
downtrend. It's one of those formations that tells us the sellers are still in
command and the price might keep falling. This pattern usually appears when the
market is already moving down and shows that the bearish thrust could
continue.
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| Downside Tasuki Gap pattern |
Name Origin
The word "Tasuki" comes from Japanese, just
like many other candlestick pattern names. In Japanese, Tasuki means a sash or
a strip that crosses over the shoulder, and the name here refers to how the
candles "cross" each other visually in the pattern. So, "Downside Tasuki Gap" basically describes a downward gap formation that continues the bearish trend.
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.
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 the Downside Tasuki Gap
Sometimes a chart tells a story that words can't. When the Downside Tasuki Gap shows up, it feels like the market is whispering a warning. After a sharp fall, prices pause for a brief period, then continue to slide again. That small pause and the gap between candles show that sellers have not finished what they started. Traders who notice this pattern often see it as a sign that the downtrend is still healthy. Still, no smart trader jumps in without checking the background. They look at how the volume behaves, how the last few sessions closed and whether the overall sentiment supports more downside movement.
The most successful approach is to stay calm and treat the pattern as part of a wider plan. Some traders wait for the next candle to confirm the move before opening a position. Others use it to manage existing trades and tighten their stop loss levels. Trading is never about chasing every signal. It is about reading the mood of the market and moving with it, not against it. The Downside Tasuki Gap is simply one of those quiet hints that the trend might still have energy left.
- 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.
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| 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.