SocialForex
Intermediate

Downside Tasuki Gap Pattern

Learn the Downside Tasuki Gap pattern - a bearish continuation signal, how to identify and trade it effectively.

Mark · Trader & Founder, Social Forex

Downside Tasuki Gap Pattern

Definition

The Downside Tasuki Gap is a three-candle Japanese candlestick pattern that appears in a downtrend and signals the continuation of the downtrend. It reflects market psychology: after a strong bearish gap (candle 1), prices attempt a minor recovery (candle 2) but fail to fill the gap, then resume the decline (candle 3), confirming that selling pressure remains dominant.

How to Identify

  • Candle 1: A long bearish candle (black) that opens with a downward gap from the previous candle (price gap).
  • Candle 2: A short bullish candle (white) that opens within the gap region (between the close of candle 1 and the low of candle 1) but does not close above the open of candle 1. In other words, it does not fully fill the gap.
  • Candle 3: A long bearish candle (black) that closes below the close of candle 1 and often breaks a nearby support level.
    • Price Action — reading candlestick patterns in context

    How to Trade

  • Confirm the trend: Ensure the market is in a clear downtrend (lower highs and lower lows).
  • Entry: Place a sell order at the closing price of the third candle or at the break of a recent low.
  • Stop loss: Set a stop loss above the high of the second candle (or above the high of candle 1 if the gap is wide).
  • Take profit: Use upcoming support levels or a risk:reward ratio of 1:2 or 1:3.

    • Real Example

    On the EUR/USD H4 chart, after a prolonged decline, prices gap down during the Asian session – closing at 1.1000. The next candle opens at 1.0995, rises slightly to 1.1015 but fails to break above 1.1020. The third candle opens lower and closes at 1.0980, confirming the pattern. A trader sells at 1.0982, stop loss at 1.1025, take profit at 1.0950 (old support).

    Common Mistakes

  • Confusion with gap fill: If candle 2 closes above the open of candle 1 (filling the gap), it is no longer a Downside Tasuki Gap but a potential reversal signal.
  • Trading against the trend: The pattern is only valid within a downtrend; if the market is sideways or uptrending, the signal is weak.
  • Ignoring volume: Low volume on candle 2 and rising volume on candle 3 strengthen the pattern's reliability.
    • Price Action — reading candlestick patterns in context

    Content is for reference only, not investment advice. Forex trading carries high risk.

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