Discover the secrets behind the Tasuki Gap candlestick pattern, a powerful continuation signal that strengthens current trends in both bullish and bearish markets. Learn how to identify and trade this pattern effectively for enhanced trading success.
What Is a Tasuki Gap Candlestick Pattern?
The Tasuki Gap is a three-candlestick continuation pattern. It’s basically the market saying, “trend is still intact,” not “trend is over.” You’ll see it in both bull and bear trends when momentum is strong enough to leave a gap, but the pullback can’t fully clean it up.
It’s built from three candles. Candle one pushes with the trend. Candle two gaps in the same direction, showing urgency. Candle three fades back into that gap, but only partially. That failure to fill the gap is the tell—buyers or sellers tried to push back, but didn’t have enough to flip the move.
Pattern Type | Trend Context | Market Sentiment | Signal |
|---|---|---|---|
Upside Tasuki Gap | Existing Uptrend | Bullish Continuation | Buy Setup |
Downside Tasuki Gap | Existing Downtrend | Bearish Continuation | Sell Setup |
This comes from Japanese candlestick work that’s been around for a long time. The names are old, but the idea is simple: gaps plus a weak counter-move often mean the dominant side is still in control.
It still shows up across stocks, forex, and crypto. Discretionary traders spot it by eye, and a lot of scanners flag it as part of candlestick chart analysis.
Just don’t treat it like a standalone edge. Tasuki Gaps are usually low-to-moderate quality unless the trend is clean and you’ve got confirmation (volume, moving averages, structure). Use it as a “stay with the trend” clue, then let your risk rules and other signals decide the trade.
How to Trade the Tasuki Gap: Entries, Stops, and Targets
Identifying Trading Opportunities with Confirmation
Think of the Tasuki Gap as a continuation trigger, not a full trade plan. Upside gaps lean bullish, downside gaps lean bearish. The difference between a clean winner and a chop trade is usually confirmation—trend context, volume, and whether price actually follows through after candle three.
Entry Points and Target Entry
Entries depend on direction:
Upside Tasuki Gap entries: Many traders go long after candle three closes, then look for continuation above candle two’s high. That extra push helps filter the “gap that’s about to get filled.”
Downside Tasuki Gap entries: Shorts are cleaner when price breaks below candle three’s low. If it can’t take that low, the pattern isn’t doing its job.
Volume Confirmation
Volume is a good lie detector here. Strong participation on the gap candle supports continuation. If the gap prints on thin volume and candle three trades heavy the other way, treat it as a warning sign, not a green light.
Profit Target and Stop-Loss Placement
Profit targets: Prior swing highs/lows are the practical targets. You can also project a measured move using the gap size, but structure usually wins.
Risk-reward ratios: 1:2 and 1:3 are common because the pattern gives you defined invalidation, so you can size it properly.
Stop-loss placement: A common stop is beyond candle one (below its low for upside gaps, above its high for downside gaps). If price breaks that, the continuation idea is in trouble.
Alternative stops: For wider setups, some traders place stops beyond the entire gap zone or behind the nearest support/resistance shelf.
Confirmation Signal Strategies
Stacking signals helps a lot. Moving averages keep you aligned with trend direction. RSI can stop you from chasing an upside gap when it’s already stretched. MACD can help confirm momentum is still expanding. Log the setup in a trading journal—over time you’ll see which market regimes (clean trend vs. range) actually pay you.
How Does the Tasuki Gap Pattern Form?
The Tasuki Gap is a three-candle continuation pattern that shows a quick counter-trend attempt, then a failure. There are two versions depending on whether you’re in an uptrend or a downtrend.
Upside Tasuki Gap Formation
The first candle is a long bullish candle. It’s the trend candle—strong close, buyers in control.
The second candle gaps up from the first candle’s close. That gap is the key feature and usually comes with strong momentum.
The third candle is bearish and pulls back into the gap. It opens inside the second candle’s body and closes inside the gap, but it does not fill the gap completely.
Downside Tasuki Gap Formation
The first candle is a long bearish candle. Strong sell pressure, trend is already pointed down.
The second candle gaps down from the first candle’s close, extending the drop and creating the gap zone.
The third candle is bullish and bounces into the gap. It opens inside the second candle’s body and closes inside the gap, but again it can’t fully fill it.
On a candlestick chart, the “gap zone” is the empty space price didn’t trade through between candles.
Key Characteristics
Gap Zone: The gap is the whole point. If price fills it cleanly right after, the setup is basically done.
Counter Candle Role: Candle three is the test. It’s profit-taking or a squeeze attempt, but it stalls before doing real damage.
Size Matters: A bigger trend candle + a cleaner gap usually means cleaner momentum. Tiny candles and messy gaps are where this pattern gets noisy.
Market Psychology
You get a strong push, then acceleration (the gap), then the other side finally steps in. But they can’t reclaim enough ground to erase the gap. That’s why traders treat it as continuation: the counter-move showed up, tried, and failed.
Is the Tasuki Gap Reliable? Strengths, Weaknesses, and False Signals
The Tasuki Gap is useful, but it’s not a “set and forget” pattern. It doesn’t have the same deep, widely-cited backtest history as some other classic setups, and most traders rate it low to moderate. That’s fine—as long as you treat it like one input, not the whole decision.
Factors Affecting Reliability
Market Conditions: Works best in a strong, obvious trend. In chop, gaps get faded and the pattern turns into noise.
Volume Confirmation: Better when the gap candle shows real participation and the pullback candle doesn’t.
Timeframe Selection: Daily/weekly signals tend to be cleaner. Intraday Tasuki Gaps get wrecked by random volatility and liquidity pockets.
Asset Class Variations: Stocks, FX pairs, and crypto all “gap” differently. Crypto trades 24/7, so gaps are less about the open and more about sudden imbalance.
Common Limitations and False Signals
The main failure mode is simple: price fills the gap. In fast markets, gaps get tagged and erased quickly, which kills the continuation read. Another issue is misreading candle three—sometimes it isn’t a mild pullback, it’s the start of a real reversal, especially if volume expands hard against the trend.
If the market is already in consolidation, Tasuki Gaps are often just random spacing between candles.
Strengths | Weaknesses |
|---|---|
Easy to spot on a chart | Low to moderate reliability |
Best in strong trend conditions | False signals in chop |
Works well with volume filters | Gets hit hard in high volatility |
Can be applied across timeframes | Limited robust backtested data |
Don’t trade it in isolation. If you can’t define trend, level context, and invalidation clearly, skip it and wait for a cleaner continuation setup.
How to Use the Tasuki Gap in Technical Analysis
The Tasuki Gap is a solid continuation candlestick pattern when the market is already trending and the gap is clean. Upside versions help you stay with strength; downside versions help you press weakness. It shows up across equities, FX, and crypto, but it doesn’t behave the same in every market.
If you’re trading it, focus on the mechanics: a real gap, then a pullback candle that fails to fill it. That gap zone is your line in the sand, and it usually gives you a clear place to define invalidation.
It works best inside a broader framework—trend filter, volume read, momentum confirmation, and nearby structure like prior swing highs/lows. That combo is what reduces the random signals and keeps you aligned with the tape.
Keep expectations realistic and risk tight. Position sizing and stop placement matter more than being “right” about the pattern.
Even in 2026-style markets—faster flows, more algos—price still leaves the same footprints. If you can read the gap and the failed fill, and you pair it with other technical tools, it’s a useful continuation signal to have in the playbook.
Tasuki Gap Examples: Bitcoin and Stock Downtrend Case Studies
Real charts are where the Tasuki Gap starts to make sense. You’re looking for a strong trend, a clean gap, then a pullback that can’t get the job done.
Upside Tasuki Gap Case Study: Bitcoin Rally
In a strong 2024 crypto uptrend, Bitcoin printed a clean upside Tasuki Gap. Candle one closed around $42,500. Candle two gapped up and traded around $43,200. Candle three opened near $42,800 and closed near $42,950—pullback into the gap, but no full fill.
A long taken near $42,950 with a stop below $42,500 (under the first candle / gap reference) saw price push to roughly $44,100 within two days. The key was follow-through after candle three, not the pattern by itself.
Downside Tasuki Gap Case Study: Stock Market Decline
In a downtrending stock, price sold off from the $30 area into $28, then printed a downside gap setup. After the gap down, the third candle bounced but only into the gap and stalled. A short near $28.50 with a stop around $29.50 worked as price continued down toward $26. Same idea: the bounce couldn’t reclaim the gap, so the downtrend stayed in control.
Key Lessons from Trading Examples
Context importance: Best results come when the broader structure is trending and clean.
Confirmation necessity: Waiting for the break (above candle two high / below candle three low) cuts down bad trades.
Gap zone dual purpose: It’s both the identifier and a practical risk reference.
Volume patterns: Strong gap volume with lighter pullback volume is usually what you want to see.
How Do You Turn Tasuki Gap Setups Into Repeatable Trading Decisions?
The Tasuki Gap works best when you treat it as a structured hypothesis: trend continuation is likely unless the gap gets filled and invalidation triggers. To make that process repeatable, track each setup the same way—trend filter used, volume behavior on the gap candle, entry trigger (close of candle three vs. break of candle two/three), stop location, and whether price respected the gap zone. Over a sample size, those notes reveal which confirmations actually improve outcomes and which ones are noise in your market and timeframe.
A trading journal also helps separate “pattern recognition” from execution quality by logging risk-reward, position sizing, and whether you followed your rules when price tested the gap. Using a dedicated tracker can make this easier to audit; for example, Rizetrade trading journal analytics dashboard for tracking PnL, metrics, and setup statistics can help you review Tasuki Gap trades alongside other continuation signals and identify the conditions where the pattern is most reliable.