In the previous article, I’ve introduced the basics of Gap. To continue, we will explore the Upside Tasuki Gap candlestick pattern. When appearing, it will always be profitable for the trader who uses it as a signal to enter an order. Here I will introduce to you the features, meaning and trading strategy with Upside Tasuki Gap.
What is Upside Tasuki Gap candlestick pattern?
Upside Tasuki Gap is an uptrend continuation pattern characterized by bullish gaps (gap up). It is considered the most standard UP signal because of its almost absolute accuracy. Both experienced traders and beginners trust this trading signal a lot.
Features of the pattern
An Upside Tasuki Gap candlestick pattern must have all of the following characteristics.
- The market is in an uptrend.
- The first candle is a bullish one.
- The second candle is a bullish one with a small body and a gap up between candle 1 and candle 2.
- The 3rd candle opens inside the 2nd real body and closes below the 2nd real body. In particular, it has to partially cover the price gap between the 1st and 2nd candles.
This pattern gives a strong trend continuation signal with high confidence. The pattern is safer if the current uptrend is strong such as the price above the EMA or SMA for example.
Meaning of the pattern
The Upside Tasuki Gap pattern shows a leveling off in market sentiment. The first long bullish candle and a gap represent general sentiment in agreement with the current trend.
After the price rallies to a new high, sellers start entering the market to push the price down. However, the important thing is that they cannot fill the gap created before. If the gap is not filled, there is a high probability that the uptrend will continue.
Gaps are usually right at the previous resistance level. After the price breaks through the Upside Tasuki Gap pattern, that resistance level will become potential support in the future. You should wait for a signal confirming the pattern formation. If it is confirmed, then open a bullish order with a high win rate.
How to trade with Upside Tasuki Gap candlestick pattern
Although this pattern has high reliability, you also need to combine it with other indicators for confirmation. You need to keep in mind that the gap is considered a support level where a bullish order can be opened at the closing price of the 3rd candle.
How to trade with this candlestick pattern and the SMA.
When the price is above the SMA, there is a high probability that the trend will continue to rise. In addition, the appearance of the Upside Tasuki Gap candlestick pattern will make the Up order safer. When the candlestick pattern is confirmed by the closing price of the 3rd candle, open a bullish order.
In this article, we introduced you to the Tasuki Upside Gap pattern and how to use it in trading. However, each market has different characteristics so you need to test on a Demo account first. If the pattern works well on the currency pair you are trading for 2-3 weeks, then use it to trade on the real account. Wishing you success on your path to profit.
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