Continuation Candlestick Pattern

UPSIDE TASUKI GAP

The Upside Tasuki Gap is a bullish continuation candlestick pattern formed in an ongoing uptrend. The Upside Tasuki Gap is found in a rising trend. A Green candle forms after gapping up from the previous Green candle. The next day opens lower and closes lower than the previous day. If the gap is not filled, the bulls have maintained control. And If the gap was filled, then the bullish momentum has come to an end. If the gap is not filled, it is time to go long if not long already. 

Criteria:

1. An uptrend is in progress. A gap occurs between two candles of the same color.
2. The color of the first two candles is the same as the prevailing trend.
3. The third day, an opposite color candlestick opens within the previous candle and closes below the previous open.

DOWNSIDE TASUKI GAP

The Downside Tasuki Gap is found during a declining trend. A Red candle forms after gapping down from the previous Red candle. The next day opens higher and closes higher than the previous day’s open. If the gap is not filled, the bears have maintained control. And If the gap was filled, then the bearish momentum has come to an end. If the gap is not filled, it is time to go short if not short already. You will find the Tasuki pattern more often in the Upside pattern than the Downside pattern.

Criteria:

1. A downtrend is in progress. A gap occurs between two candles of the same color.
2. The color of the first two candles is the same as the prevailing trend.
3. The third day, an opposite color Candlestick opens within the previous candle and closes below the previous open.
4. The third day close does not fill the gap between the two black candles.
5. The last two candles, opposite colors, are usually about the same size.

ON NECK LINE

The On Neck pattern is almost a Meeting Line pattern, but the critical term is almost. The On Neck pattern does not reach the previous day’s close; it only reaches the previous day’s low.

Criteria:

1. A long Red candle forms in a downtrend.
2. The next day gaps down from the previous day’s close; however, the body is usually smaller than one seen in the Meeting Line pattern.
3. The second day closes at the low of the previous day.

THRUSTING

The Thrusting pattern is almost an On Neck or an In Neck pattern and also resembles the Meeting Line pattern. It has the same description as the On Neck pattern except that it closes near, but slightly below, the midpoint of the previous day’s black body.

Criteria:

1. A long Red candle forms in a downtrend.
2. The next day gaps down from the previous day’s close; however, the body is usually bigger than the ones found in the On Neck and In Neck patterns.
3. The second day closes just slightly below the midpoint of the previous day’s candle.

RISING THREE METHOD

The Rising Three Method is an easy pattern to see during uptrends. A long Green candle forms. It is then followed by a series of small candles, each consecutively getting lower. The optimal number of pullback days should be three. Two or four or five pullback days can also be observed. The important factor is that they do not close below the open of the big Green candle. It is also preferred that the shadows do not go below the Green candle’s open. The final day of the formation should open up in the body of the last pullback day and close higher than the first big Green candle.

Criteria:

1. An uptrend is in progress. A long Green candle forms.
2. A group of small-bodied candles follow, preferably Red bodies.
3. The close of any of the pullback days does not close lower than the open of the big Green candle.
4. The final day opens up into the body of the last pullback day and proceeds to close above the close of the first big Green candle day.

FALLING THREE METHOD

The Falling Three Method is basically the opposite of the Rising Three Method. The market has been in a downtrend. A long Red candle forms. It is then followed by a series of small candles, each consecutively getting higher. The optimal number of uptrending days should be three. Again, two or four or five counter trend days can be observed. The important factors are that they do not close above the open of the big Red candle and that the shadows do not go above the Red candle’s open. The final day of the formation should open down in the body of the last uptrend day and close lower than the first big Red candle’s close.

Criteria:

1. A downtrend is in progress. A long Red candle forms.
2. A group of small-bodied candles follows, preferably white bodied.
3. The close of any of the uptrend days does not close higher than the open of the big Red candle.
4. The final day opens up into the body of the last uptrend day and proceeds to close below the close of the first big Red candle day.

SIDE-BY-SIDE WHITE LINES

Side-by-Side White Lines are found in uptrends. Two white candles form side-by-side after gapping up from the previous white candle. Narabi in Japanese means “in a row.” Narabi aka means “whites in a row.” Sideby-Side Lines, black or white, indicate a pause or stalemate when they are observed by themselves. In this case, they have a different meaning because they occur after a gap in the trend’s direction.

Criteria:

1. An uptrend is in progress. A gap occurs between two candles of the same color.
2. The color of the first two candles is the same as the prevailing trend.
3. The third day, a candle opens at the same or near the open price of the previous day.
4. The third day closes near the close of the previous day.

SEPARATING LINES

“lines that move in opposite directions.” The market is in an uptrend when there is a pullback, exhibited by a long Red candle. However, the next day opens at the level that it opened the prior day. The Separating Line Pattern has the same open and are the opposite colors. This is the exact reverse of the Meeting Line Pattern. In other Japanese circles, this is also known as Furiwake or Dividing Lines.

Criteria:

1. An uptrend is in progress. Then a day occurs that is the opposite color of the current trend.
2. The second day opens at the open of the previous day.
3. The second day should open on its low for the day and proceed higher.

MAT HOLD

The Mat Hold Pattern is similar to the Rising Three Method. It has the look of the Upside Gap Two Crows except that the second Red body (third day) dips into the body of the large Green candle. It is followed by another small Red body that dips a little further into the Green candle body. The final day gaps to the upside. It continues its upward move to close higher than the trading range of any of the previous days. The implication is that the trend has not stalled. This is a good point to add to positions. The Mat Hold pattern is a stronger continuation pattern than the Rising Three Method. During the days of “rest,” unlike the Rising Three Method, the price stays close to the top of the Green candle’s upper range.

Criteria:

1. An uptrend is in progress. A long Green candle forms.
2. A gap up day that closes lower than its open creates a small Red candle.
3. The next two days form small candles somewhat like the Rising Three Method.
4. The final day gaps up and closes above the trading ranges of the previous four days.

THREE-LINE STRIKE

Three-Line Strike, also known as the Fooling Three Soldiers, is a four-lin pattern that occurs during a defined trend. This pattern represents a resting period, but unlike most resting periods, this one occurs all in one day. It ends up as an extended Three Green Soldiers pattern.

Criteria

1. Three White Soldiers, three white candles, are continuing an uptrend.
2. The fourth day opens higher, but then pulls back to close below the open of the first Green candle.