Upside Tasuki Gap Pattern

Definition

The Upside Tasuki Gap is a three-candle bullish continuation pattern that appears during an uptrend. The first candle is a long bullish candle. The second candle gaps up from the first and continues rising. The third candle is bearish, opening within the second candle's body and closing below the second candle's close but above the first candle's close, leaving the gap partially unfilled. This indicates a minor pullback while the uptrend remains intact.

How to Identify

• Primary trend: Clear uptrend before the pattern.
• Candle 1: Strong bullish candle, long body, small or no wicks.
• Candle 2: Bullish gap up from candle 1 (open > close of candle 1), bullish body.
• Candle 3: Bearish candle, opens within candle 2's body (open < close of candle 2), closes below candle 2 but above candle 1, leaving a visible gap.

How to Trade

• Entry: Wait for confirmation – a fourth bullish candle closing above the high of candle 2 or a breakout above the pattern's high. Alternatively, enter at the close of candle 3 if confident, but waiting is safer.
• Stop-loss: Place below the low of candle 3 or the pattern's lowest point (usually candle 1's low).
• Take-profit: Set targets using support/resistance levels or Fibonacci extensions. Use a trailing stop to manage risk.

Real Example

Assume EUR/USD in an uptrend. Day 1: long bullish candle from 1.1000 to 1.1050. Day 2: gap up to 1.1070, close at 1.1085. Day 3: bearish candle opens at 1.1075, closes at 1.1065 – still above 1.1050. This is an Upside Tasuki Gap. A trader could buy at 1.1085 (high of candle 2) after confirmation, stop-loss below 1.1050, target 1.1150.

Common Mistakes

• Confusing with reversal patterns: If the third candle closes below the first candle (filling the gap), it signals a reversal, not an Upside Tasuki Gap.
• Trading without confirmation: Entering at the third candle without waiting for a subsequent bullish candle can lead to losses if the downtrend continues.
• Ignoring the trend: The pattern is only valid in an uptrend; using it in a sideways or downtrend reduces reliability.