Upside Tasuki Gap Candlestick Pattern: Traders rely on technical analysis to predict the future movement of the price in the stock to earn profits. The technical analysis comprises multiple methods from candlestick patterns and chart patterns to indicators. Candlestick patterns are derived from historical reactions of price and used to predict future movement. 

In this article, we will discuss one such candlestick pattern called the upside tasuki gap candlestick pattern.

Upside Tasuki Gap Candlestick Pattern – Definition

The upside tasuki gap candlestick is a three-candlestick pattern which indicates a bullish continuation. The formation of this pattern in an uptrend will mean that the trend will continue to move in the same direction.

This pattern can appear anywhere or at any trend but it is preferable for this pattern to appear in an uptrend as the probability of bullish movement of the price will be higher.

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Formation

The upside tasuki gap candlestick consists of three candles and they should be as follows:

  1. A large green candle that is a part of the existing uptrend.
  2. Another green candle that opens with a gap up above the first candle.
  3. The third candle is a red candle that closes between the gap created by the prior two green candles.

Upside Tasuki Gap Candlestick Pattern – Meaning

When the Upside Tasuki Gap Candlestick Pattern forms in an uptrend, the formation of the first candle suggests that the buyers are in control and are pushing the price higher. The second candle opening with a gap up indicates that there has been even higher buying pressure which has resulted in a gap up.

The third bearish which closes between the gap indicates that selling pressure couldn’t push the price further down and the gap acted as a support zone. Hence, this pattern generally indicates that the buying pressure is still intact. The formation of this pattern in an uptrend indicates the continuation of the market sentiment after a small pause in the upward movement.

This shows that the buying intent in the market remains unchanged and hence the positive sentiment might continue and push the price higher. Therefore those who hold the stock where this pattern has been formed can continue to hold on to that for a longer time. It also creates an opportunity for new long positions as well.

Upside Tasuki Gap Candlestick Pattern – Trading Ideas

Traders must ensure that the prior trend before the formation of the Upside Tasuki Gap Candlestick Pattern is an uptrend. Once this pattern is formed in an uptrend, the following are the guidelines to take a trade:

  • ENTRY: When the price of the security starts trading above the open price of the third candle of the Upside Tasuki Gap Candlestick pattern, traders can take a long position.
  • TARGET: Traders can exit the position when the price of the security reaches the immediate resistance zone. Once this level is reached, one can also book partial profits in the trade and hold on to the remaining position until the next resistance level.
  • STOP LOSS: Traders can place the stop loss near the close price of the first candle.

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Upside Tasuki Gap Candlestick Pattern – Example

In the above one-day chart of SURYA ROSHNI, we can observe that the upside tasuki gap candlestick pattern had formed when the price was in an uptrend. As discussed, the price saw a bullish continuation after the formation of this pattern.

At the time of the formation of this pattern, traders could have taken a long position when the stock was trading above Rs. 105.25 and the stop loss was at Rs. 97.25

Upside Tasuki Gap Candlestick Pattern – Key Features 

  • The first candlestick is a strong bullish candlestick, indicating a significant upward movement.
  •  The second candle is also a bullish candle that opens higher than the first’s close, creating a gap.
  • The third candle is a bearish that closes in the gap formed. This suggests the bullish momentum may continue as the price wasn’t able to close below the gap.
  • Ideally, trading volume should rise during the pattern, especially during the first candlestick, confirming the strength of the trend.

This pattern implies that after a brief pause, the bullish momentum is likely to resume, driving prices higher. However, traders often verify with other indicators before making trading decisions.

Upside Tasuki Gap Candlestick Pattern – Limitations

Although it usually indicates a bullish continuation, the Upside Tasuki Gap pattern has restrictions. Its dependability decreases in erratic markets, requiring further validation from other data. Before making trading decisions based just on this pattern, one should carefully study and analyze the possibility of false signals, which are not rare.

To reduce the chance of making a mistake while reading the pattern’s signals, traders should proceed with caution and judgment.

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Conclusion

A powerful instrument in a trader’s toolbox, the upside tasuki gap candlestick pattern provides an obvious indication of a bullish continuation in an upward trend. Traders may successfully use this pattern in their trading methods by comprehending its creation, psychology, and trading tactics.

But before making trading decisions, like with any technical indicator, it’s important to take into account other elements including market circumstances, trend strength, and risk management. What are your views about this article, please let us know in the comment section below.

Written by Praneeth Kadagi

By utilising the stock screenerstock heatmapportfolio backtesting, and stock compare tool on the Trade Brains portal, investors gain access to comprehensive tools that enable them to identify the best stocks, also get updated with stock market news, and make well-informed investments.


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