Upside Gap Three Methods

The upside gap three methods is a simplistic pattern, similar to the upside tasuki gap and it occurs in a strong trending market. In an up-trend, a gap occurs between two white (or green) candles, and the final day opens within the top white (or green) body. It closes in the lower white (or green) body which then fills the gap between the first two candles.

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Criteria for Upside Gap Three Methods:

  • In an up-trend two white (or green) candles form
  • The second candle in the formation gaps above the first
  • The third day opens lower, into the body of the top white (or green) candle and closes into the body of the first white (or green) candle.

Pattern Psychology behind the Upside Gap Three Methods
The market is moving in a direction and then a gap appears between two white (or green) candles. Keep in mind that gaps are significant in that they eventually have to be filled. The fact that the gap fills immediately leads investors to think that the pullback is just a profit-taking pullback. The trend should resume immediately after the gap is filled.

The psychology built into a major candlestick signal is simple common sense investment philosophy. When you learn how to utilize the candlestick patterns correctly you now have the knowledge to improve your trading techniques for those trading entities you want to trade. You do not have to depend on canned programs that sometimes work and sometimes don’t work and you do not have to buy or sell stock recommendations blindly based on a research analyst’s recommendation.

Japanese Candlestick trading signals consist of approximately 40 reversal and continuation patterns. All candlestick patterns have credible probabilities of indicating correct future direction of a price move.

Candlestick signals identify where money is flowing in and out of stocks/sectors. Being able to identify and understand the investor psychology that creates the candlestick signals produces a huge advantage. It allows an investor to participate in stock investments that have an extremely high probability of moving in the right direction.

Throughout his investment career, Stephen Bigalow has directed his investment acumen towards developing improved methods for extracting profits from the investment markets. His research, encompassing all fundamental and technical methods, resulted in verifying that Candlestick analysis was superior to any other method.