Low Price Gapping Play Candlestick Pattern

Hello, one and all. Maybe you've noticed that there's a lack of content on financial literacy on the internet nowadays. If you're reading these lines, it's encouraging to see that you're getting closer to your financial freedom goal. I'm writing this article to contribute to your journey. However, it's important to remember that the information presented here is for educational purposes only. One of the paths to financial freedom is trading in financial markets. To engage in trading, it's necessary to be familiar with various technical tools, and one of these tools is candlestick analysis. In this article, I've delved into the "Low Price Gapping Play" candlestick pattern, which is part of candlestick analysis.

Low Price Gapping Play Pattern

• Topic: Low Price Gapping Play
• Type: bearish
• Trend direction: continuation
• Opposite pattern: High Price Gapping Play

What is the "Low Price Gapping Play" Candlestick Pattern?

The Low Price Gapping Play is a continuation candlestick pattern in a downtrend. This pattern is observed in a bear market. Sellers initially push prices lower and then take a break after a while. This pause leads to a hesitation in the price decline. Following the pause, a downward gap forms, indicating that sellers are regaining strength. They then resume moving prices lower. This sequence results in the formation of the Low Price Gapping Play pattern.

Structure of the "Low Price Gapping Play" Candlestick Pattern

The Low Price Gapping Play is a candlestick pattern that often appears when the market is already in a downtrend. Its main message is simple: the downward movement is not finished yet, and prices are likely to keep dropping. This formation is part of Japanese candlestick analysis and is built from several candles that follow a specific sequence. Let's break it down step by step:

1. The First Bearish Candle

The pattern begins with a strong bearish candle. This candle usually has:

• A long body that shows heavy selling pressure.
• A red (or black) color, signaling that sellers dominated the session.
• Very little or no lower wick, which means prices closed near the session's lowest point.

In simple terms, this candle tells traders: "Bears are in control, and they are pushing the market lower with confidence."

2. A Few Small Candles

After the big bearish candle, the market slows down and prints a series of small candles. These candles might be red or green, but their bodies are usually short and weak. This stage represents a pause or consolidation period:

• Buyers try to step in and push prices up.
• Sellers are taking a short break after the heavy drop.
• The overall price action looks like the market is "catching its breath."

Even though the candles look neutral, they do not signal a reversal. Instead, they simply mark a temporary balance before the next move.

3. The Gap Down

Next, the market suddenly opens lower than the previous small candles, creating a gap on the chart. This gap often happens because of:

• Negative news or economic data,
• Strong market sentiment,
• Or simply because sellers are so aggressive that buyers can't keep up.

The gap is important because it breaks the consolidation and shows that sellers are ready to continue pushing the trend downward. Think of the gap as a door opening for another wave of selling pressure.

4. The Continuation Bearish Candle

Finally, the pattern is completed by another large bearish candle. This candle is usually similar in strength to the first one and shows that the downtrend is alive and strong. Key points about this candle:

• It confirms the gap was not a false signal.
• It proves sellers are still dominating the market.
• It usually has a long body, which adds weight to the bearish continuation.

When traders see this final candle, they understand that the Low Price Gapping Play has been confirmed, and the market will likely keep falling.

👉In conclusion, the formation of the "Low Price Gapping Play" indicates a downward pressure on prices, which may indicate that the current downtrend will persist. The formation of this pattern is generally considered an indication that the downward movement in prices will continue and that the current downtrend may strengthen.

Trading with the "Low Price Gapping Play" Candlestick Pattern

Now we know that the Low Price Gapping Play is one of the patterns signaling the continuation of a downtrend. If we observe a strong downward trend in the price chart, it may present an opportunity to open a short position. However, while this pattern signals the continuation of a downtrend, it's important not to rely on it alone. It is necessary to verify with other technical analysis tools and consider fundamental factors. For a safer approach, it may be preferable to wait for the price to reach a resistance level or trend line and then sell.

• Entry (Sell): The closing level of the continuation bearish candle (last candle of the pattern) can be considered as the selling point. As a more aggressive approach, the closing level of the first candle below the gap can also be considered as the selling point.
• Stop Loss: It is possible to place the stop loss order above several small candles observed in the pattern structure.
• Target: It is recommended to consider the risk/reward ratio and set the target level accordingly.

Below is an example trade I'd like to share, showcasing the "Low Price Gapping Play" candlestick pattern on the SSR Mining Inc. stock chart. This pattern clearly reflects a bearish market condition, where the stock price gaps down, confirming and reinforcing the ongoing downtrend. It highlights the continued dominance of sellers, adding further weight to the negative sentiment surrounding the stock. By analyzing this candlestick pattern on SSR Mining Inc., we gain a clearer understanding of how price action aligns with the broader market trend, further illustrating the strength of the downtrend.

Low Price Gapping Play on SSR Mining Inc.

A fact to recall: Trading in the Forex market always involves risk. Like all candlestick patterns, the "Low Price Gapping Play" pattern can also produce misleading signals. Therefore, it should be used in conjunction with other technical tools and verified before opening a trade. Trade with a small portion of your capital and do not overlook these small trades. Wishing you trading success!