Upside Tasuki Gap Candlestick Pattern: How to Confirm & Trade It Successfully

The Upside Tasuki Gap candlestick pattern is a bullish candlestick continuation pattern that suggests an existing bullish trend is likely to continue after a brief pause.

Unlike reversal patterns that indicate trend exhaustion, the Upside Tasuki Gap signals that buyers remain in control, even as the price briefly pulls back.

This candlestick formation consists of three candlesticks and appears when the second candlestick gaps up from the first, followed by a third candle that partially retraces but does not close the gap.

Traders often look for this pattern in strong uptrends to confirm that momentum is intact.

The Upside Tasuki Gap pattern typically forms as follows:

1. First candle – A strong bullish candle that confirms the ongoing uptrend.
2. Second candle – Another bullish candle that gaps up from the first candle’s close, reinforcing buyer strength.
3. Third candle – A bearish candle that moves down but does not fully close the gap between the first two candles.

   The key characteristic of the Upside Tasuki Gap is that the third candle does not fill the gap, which suggests buyers are still in control and the uptrend is likely to continue.

The Upside Tasuki Gap candlestick pattern is illustrated below.

• Appears in an uptrend, confirming market sentiment and bullish momentum
• Three-candle structure:
  • • First candle: Strong bullish candle.
    • Second candle: Gaps up and closes higher.
    • Third candle: Moves down slightly but does not close the gap.
• Indicates continuation, as the gap remains unfilled.
• Works best in high-volume, trending markets where price gaps are respected.

The Upside Tasuki Gap pattern reflects market sentiment and bullish dominance despite a minor pullback.

1. First candle – Buyers push the price higher, confirming an ongoing uptrend.
2. Second candlestick – Gaps up, showing that buying pressure remains strong.
3. Third candle – Sellers attempt to retrace the gap but fail, reinforcing buyer control.

Since the gap remains partially open, it suggests that the uptrend is intact, and momentum is likely to continue.

Market Conditions

The Upside Tasuki Gap works best in strong uptrends. It signals that temporary selling pressure is being absorbed, allowing the uptrend to continue.

Volatility Considerations

• In high volatility markets, the third candle’s pullback may be larger, but the gap must remain partially open for the pattern to be valid.

• In low volatility markets, the pullback is typically smaller, making the pattern easier to identify.

• Stop-loss placement: Below the low of the third candle (or below the first candle’s opening price for a wider stop.
• Entry strategy: Traders enter after the third candle closes, ensuring that the gap remains unfilled.
• Profit targets: Can be set at previous resistance levels or using a risk-reward ratio of 2:1.

• The third candle fully closes the gap – This invalidates the pattern and may indicate trend exhaustion.
• Weak volume on the second candle’s gap up – A lack of conviction may lead to a failed continuation.
• Strong selling pressure on the third candle – If the third candle has a large red body, it may indicate a reversal instead of a continuation.

To incorporate the Upside Tasuki Gap into a systematic trading strategy, traders should:

1. Identify a strong uptrend before the pattern forms.
2. Confirm the three-candlestick formation, ensuring that the gap remains open.
3. Use volume analysis – Higher volume on the second candle increases the pattern’s reliability.
4. Set stop-losses below the pattern’s low to protect against invalidation.
5. Backtest the pattern across different assets and timeframes before live trading.

Below is a simple Amibroker AFL script to detect the Upside Tasuki Gap pattern:

// Upside Tasuki Gap AFL Code for Amibroker

_SECTION_BEGIN(“Upside Tasuki Gap”);

 FirstBullish = Ref(Close, -2) > Ref(Open, -2);

GapUp = Ref(Open, -1) > Ref(Close, -2);

SecondBullish = Ref(Close, -1) > Ref(Open, -1);

ThirdBearish = Close < Open;

PartialGapFill = Close > Ref(Open, -1) AND Close < Ref(Close, -1);

 UpsideTasukiGap = FirstBullish AND GapUp AND SecondBullish AND ThirdBearish AND PartialGapFill;

 PlotShapes(IIf(UpsideTasukiGap, shapeUpArrow, shapeNone), colorBlue, 0, High);

 _SECTION_END();

This script helps traders detect Upside Tasuki Gap patterns on stock charts.

Best Markets for the Upside Tasuki Gap Pattern

The Upside Tasuki Gap pattern is most reliable in markets where price movement and gaps occur naturally, such as:

• Stock Markets – Gaps frequently form due to overnight news, earnings reports, and institutional buying or selling.
• Futures Markets – Gaps often appear between trading sessions, especially in commodities and indices.
• ETFs & Index Funds – Gaps are common due to changes in underlying asset prices.

Less Reliable in Forex & Crypto:

• Forex & Crypto markets trade 24/7, so price gaps are rare except during major news events or weekends (for crypto).

• Traders using this pattern in these markets may need additional confirmation, such as technical analysis indicators or volume spikes.

Enhancing Confirmation for Higher Accuracy

To increase reliability and reduce false signals, traders should use additional confirmation techniques:

✔ Moving Averages –

• Look for price above the 50-day or 200-day moving average to confirm the uptrend before trading.
• A bullish crossover of shorter-term moving averages (e.g., 10-day crossing above the 50-day) strengthens the signal.

✔ Momentum Indicators –

• RSI above 50 suggests strong bullish momentum and reduces the risk of false breakouts.
• MACD crossover (bullish) adds further confidence that the trend will continue.

✔ Volume Confirmation –

• The second candle’s gap-up should have increased volume, signaling strong buying interest.
• If the third candle has low volume, it indicates weak selling pressure, making a continuation more likely.

✔ Waiting for Additional Candles –

• Some traders wait for a fourth candle to confirm that the trend is continuing before entering a trade.
• If the fourth candle breaks the second candle’s high, it confirms strong bullish momentum.

Trading Tip:

Markets with high liquidity and natural gaps (stocks, futures) are ideal for this pattern. If trading forex or crypto, use technical analysis, candlestick chart patterns, RSI, and volume confirmation to improve trade accuracy.

The Upside Tasuki Gap candlestick pattern is a bullish continuation signal that helps traders stay in uptrends despite minor pullbacks. 

It consists of three candlesticks, with the second candle gapping up and the third candle retracing slightly without closing the gap.

When used correctly and confirmed with other technical indicators, this pattern offers high-probability trade setups in trending markets.

Links to articles about other Candlestick Patterns

1. Doji
2. Hammer
3. Inverted Hammer
4. Bullish Engulfing
5. Bearish Engulfing
6. Morning Star
7. Evening Star
8. Shooting Star
9. Hanging Man
10. Piercing Pattern
11. Dark Cloud Cover
12. Three White Soldiers
13. Three Black Crows
14. Dragonfly Doji
15. Gravestone Doji
16. Spinning Top
17. Marubozu
18. Tweezer Top
19. Tweezer Bottom
20. Bullish Harami 
21. Bearish Harami
22. Rising Three Methods
23. Falling Three Methods
24. Bullish Abandoned Baby 
25. Bearish Abandoned Baby 
26. Bullish Kicker 
27. Bearish Kicker
28. Three Inside Up
29. Three Inside Down
30. Upside Gap Two Crows
31. Mat Hold
32. Upside Tasuki Gap
33. Downside Tasuki Gap