Downside Tasuki Gap: Explained in 60 Seconds

A downside Tasuki gap is a three-candle formation that appears inside a downtrend and is defined by a gap between the first two candles and a third candle that closes inside that gap.

What the pattern looks like

The first candle is a long black candle. The second candle gaps lower, opens below the prior close, and also closes lower. The third candle is white; it opens inside the body of the second candle and closes inside the gap, but it does not fill the gap completely.

The three rules that must be met

Price must be trending lower when the pattern begins. The gap between the first and second candle must remain unfilled by the third candle. Finally, the low of the first candle must sit above the high of the third candle; if that relationship is reversed, the pattern is invalid.

Why traders get it wrong

Many sources instruct traders to sell on the close of the third candle. The source material states that the count shows the opposite result, so the pattern should not be treated as an automatic short entry.