Upside Tasuki Gap Candlestick Pattern: Complete Guide
Upside Tasuki Gap Candlestick Pattern
Among the family of Tasuki patterns, the Upside Tasuki Gap is one of the important patterns. It is a bullish continuation pattern made up of three candlesticks. To support the pattern of an upside of the Tasuki gap candlestick, three bullish candlesticks, a gap, and a bearish candlestick emerge in a particular order. Retail traders might infer from this candlestick pattern that buyers are in charge and that the market’s positive trend will continue. Additionally, it permits new investors to retain long holdings to increase their potential profits.
The Appearance of Upside Tasuki Gap
Its initial candlestick is a long, upward-trending line with a green body. Any green candle, whether it is long or short, may appear as the second line. The first two lines have different prices. Any red candle (apart from Doji candles) that opens between the previous opening and closing prices may represent the third line. Although it closes below the previous opening price, the price difference between the first and second lines remains. The Upside Tasuki Gap should be verified, which means that candles, after their appearance, should close above the closing price of the second line. The pattern’s second and third lines might create the Bearish Tasuki Line, which would operate as a bearish reversal pattern. As a result, it is advisable to take the market situation into account.
Insights into Upside Tasuki Gap
Every candlestick pattern, which symbolizes movements, conveys a different aspect of the market and how buying and selling pressure manifested itself. While pinpointing the specific cause of an event may be impossible, studying market movements is a good way to increase market knowledge and, not least, to generate fresh trading concepts.
In a bullish market trend, most market players believe that the market will continue to rise. And much to their delight, the market creates the tall positive first candle of the Tasuki pattern. The next trading period is affected by market sentiment, which causes the market to gap up and extend its winning streak. The second candle lengthens and is now positive.
However, after generating two lengthy candles that are positive with a gap that is also positive in between, market players are growing more concerned that the market has overbought and is about to see a drop. Their worry appears to be justified as the following candle develops a bearish wick and closes below the opening of the preceding bar. Buyers, however, think that the bearish bar was just a brief pullback because it failed to break through the gap, which is a significant resistance level.
Some More Explanation
Price always moves in waves that are both impulsive and retracing. An impulsive wave will develop after a retracement and vice versa. A bearish candlestick will appear, signifying the retracement wave, as the two preceding bullish candlesticks demonstrate the bullish impulsive wave.
A significant retracement suggests a weak trend, whereas a slight pullback shows a strong trend. The bearish candlestick must therefore close above the price of the first candlestick in order for it to occur. This is why, after a slight retreat in the formation of the bearish candlestick, a bullish impulsive wave will appear. It represents the continuation of the current pattern.
EMA Strategy for Upside Tasuki Gap
This candlestick pattern, also known as a trend continuation, is employed in trading in conjunction with other methods of technical analysis like trendlines and moving averages. For example, a simple EMA strategy can be employed to trade Upside Tasuki Gap in addition to other strategies.
Mark the chart with a 21 EMA and a 38 EMA. Confirm the trend’s direction, which must be upward. If candlesticks develop well above the moving average line, the price will move upward. When an upward Tasuki pattern appears during an uptrend, open a buy order and set your stop-loss order under the moving trendline. Hold the position until there is no bearish moving average crossover.
The Upside Tasuki candlestick pattern is mostly employed in stock and indices charts. Engulfing or pin bar candlesticks are significant candlesticks in forex. It is often advised not to rely on only one candlestick. For the best trading plan, you need to incorporate other technical tools. Make sure to properly backtest the trading method before using a live account.