For a better understanding of this article, you should already know what Japanese Candlesticks are and all their features; for this reason, we suggest you to read this introductory article to Japanese Candlesticks: Japanese Candlestick Chart ( So that you can understand also the Ratings given to the Candlestick Patterns for the “quality” of the signal and for their frequency to “appear” on Charts).
Let’s analyse now the following Candlestick Pattern: “Downside Gap Three Methods”.
Gap Three Methods
– Normally it should be a signal of reversal of the current Trend.
– You can find it in the variants: Downside and Upside, depending on the Trend in which is located.
Downside Gap Three Methods
– It occurs during a Downtrend; confirmation is required by the candles that follow the Pattern.
– The First Candle is long and black.
– Then there is a Gap Down between the First and Second Candle.
– The Second Candle is long and black; the shadows of both Candles (First and Second) should not overlap.
– The Third Candle is white, it has the Open within the Real Body of the Second Candle; whereas it has the Close within the Real Body of the First Candle.