Upside tasuki gap: the three-candle gap that tests an uptrend

An upside tasuki gap can help traders understand a short pause within an uptrend. Like any candlestick pattern, it works best when viewed alongside the wider chart, market conditions and other technical tools.

What is the upside tasuki gap?

The upside tasuki gap is a three-candle candlestick pattern that can appear during an uptrend. It shows:

• An initial move higher.
• A second bullish candle that gaps up.
• A third bearish candle that moves back into the gap but does not fully close it.

The name comes from the Japanese word 'tasuki', a sash used to tie back sleeves. In charting, it reflects the way the third candle moves back across the gap left by the first two candles.

The pattern’s main feature is the gap between the first and second candles. A third candle then moves lower into that gap but does not fully close it. This means its close remains above the first candle’s high.

At a glance:

How do you identify the upside tasuki gap on a chart?

Before looking for the candle sequence, traders usually check whether price is already moving higher. Without an existing uptrend, the continuation reading becomes weaker.

Use this checklist:

1. Check the trend. Price should already be rising before the pattern appears.
2. Look for the first bullish candle. This candle supports the existing uptrend.
3. Find the second bullish candle. It should open above the high of the first candle, leaving a visible gap, and then close higher.
4. Check the third candle. This candle is bearish and moves back into the gap.
5. Confirm that the gap remains open. The third candle should close above the first candle’s high.

Past performance is not a reliable indicator of future results.

Is the upside tasuki gap bullish or bearish?

The upside tasuki gap is usually classed as a bullish continuation pattern. In simple terms:

• The first candle supports the existing uptrend.
• The second candle gaps higher.
• The third candle pulls back, but not enough to close the gap.

Some traders may read this as a sign that buyers still have influence. That reading depends on the wider chart, though. A pattern forming in a strong uptrend may be viewed differently from one forming near resistance, during low volume or after a long, stretched move higher.

The downside tasuki gap is the opposite version. It appears in a downtrend, gaps lower on the second candle, and then has a third bullish candle that does not close the gap. In that case, some traders may view the unfilled gap as a sign that sellers still have influence.

How traders use the upside tasuki gap

Traders who study the upside tasuki gap often treat it as one part of a wider process, rather than a signal to act on by itself. The steps below explain how the pattern is commonly approached for educational purposes. They are not a recommendation to enter or exit any position.

• Step 1. Confirm the trend and patternCheck that a clear uptrend is in place, such as higher highs and higher lows, price above a chosen moving average, or the pattern forming near a key level. Some traders wait for the next candle to close above the second candle’s close.
• Step 2. Review possible entriesSome traders look for a close above the second candle’s high, a buy-stop order above that level, or another tool, such as momentum, for extra context. More confirmation may reduce false readings, but can mean entering later.
• Step 3. Consider risk managementSome traders use the third candle’s low, or the gap itself, as a stop reference. Stop placement should reflect a trader’s own risk plan. Standard stop-loss orders are not guaranteed. Guaranteed stop-loss orders incur a fee if activated.
• Step 4. Define a target and monitorPotential targets may include previous swing highs, round numbers, resistance levels or a measured price projection. The pattern remains relevant only while the broader trend holds.

Continuation patterns don’t always play out as expected, and false readings are common in weak or thinly traded markets. Past performance is not a reliable indicator of future results.

What is a failed upside tasuki gap?

A failed upside tasuki gap is one where the expected continuation higher does not happen.

This may occur when:

• A later candle closes the gap completely.
• The price breaks below the low of the three-candle structure.
• The wider uptrend loses momentum.
• Market conditions change after the pattern forms.

In these cases, some traders may consider the setup weakened because the gap that defined the pattern has been erased.

Common indicators used with the upside tasuki gap

A single candlestick pattern gives limited information, so traders often combine the upside tasuki gap with other tools. These can help add context, but they do not remove risk.

Upside tasuki gap vs downside tasuki gap

The upside and downside tasuki gaps work in similar ways, but in opposite directions.

• The upside tasuki gap appears in an uptrend and is usually read as a bullish continuation pattern.
• The downside tasuki gap appears in a downtrend and is usually read as a bearish continuation pattern. In both cases, the main feature is a gap that the third candle does not fully close.

The practical takeaway is simple: first identify the wider trend, then check whether the three candles fit the pattern. Confusing one version for the other usually comes from misreading the trend direction.

Upside tasuki gap chart examples

For a hypothetical example, imagine a continued rise in a major index such as the Germany 40.

The sequence might look like this:

1. A clear bullish candle forms during an uptrend.
2. The next session opens above the previous high, creating a gap, and closes higher.
3. The third session opens within or near the second candle’s range.
4. Price moves lower into the gap but does not fully close it.

The remaining open gap is what some traders would look for in an upside tasuki gap.

Past performance is not a reliable indicator of future results.

A second example might involve a commodity such as gold during a steady climb. The same three-candle sequence appears, but this time the gap is narrow and the pullback candle is small.

A smaller gap can be easier to close in the following session, so some traders consider the size and clarity of the gap when assessing the pattern.

Past performance is not a reliable indicator of future results.

Common mistakes when assessing the upside tasuki gap

Upside tasuki gap mistakes often come from applying the pattern too loosely. Here are a few to watch for:

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