Understanding the Tasuki Gap

What is the Tasuki Gap?

The Tasuki Gap is a continuation candlestick pattern that signifies a continuation of the current trend, either bullish or bearish. It appears after a gap in the price chart, suggesting that the trend is likely to continue. There are two variations of the Tasuki Gap: the Bullish Tasuki Gap and the Bearish Tasuki Gap.

How is the Tasuki Gap Identified?

The Tasuki Gap pattern is identified by:

1. Gap Formation: A gap between the current candle and the previous candle.
2. Continuation Candles: Following the gap, a continuation of the current trend, typically characterized by candles that show momentum in the direction of the prevailing trend.
3. Pattern Confirmation: The pattern is confirmed if the candles following the gap continue in the direction of the gap.

When to Use the Tasuki Gap

The Tasuki Gap pattern is used to:

• Identify Trend Continuation: Recognize a potential continuation of the current trend, whether bullish or bearish.
• Evaluate Market Momentum: Assess if the current trend is likely to continue based on the gap and subsequent candles.
• Adjust Trading Strategies: Modify trading strategies to capitalize on the anticipated continuation of the trend.

Formula Example

To identify the Tasuki Gap pattern:

1. Gap Formation: Ensure there is a gap between the close of the previous candle and the open of the current candle.
2. Continuation Candles: Check if the subsequent candles continue in the direction of the gap.
3. Pattern Characteristics:
   • Bullish Tasuki Gap: A bullish gap followed by bullish candles.
   • Bearish Tasuki Gap: A bearish gap followed by bearish candles.

For example:

• In a bullish trend, if there is a gap up and the following candles continue to rise, it may indicate a Bullish Tasuki Gap.
• In a bearish trend, if there is a gap down and the following candles continue to fall, it may indicate a Bearish Tasuki Gap.

Parameters

The parameters for identifying the Tasuki Gap pattern include:

• Data: Defines the type of data to use for the pattern.

  • Value: ohlc
  • Description: The pattern uses Open, High, Low, and Close prices.

• Previous N Candles: Number of preceding candles to check.

  • Default Value: 1
  • Min Value: 1
  • Max Value: 300
  • Description: Checks for the Tasuki Gap pattern in the last N candles.

• Pattern Type: Specifies the type of Tasuki Gap.

  • Default Value: :bullish
  • Drop Display Values: Bullish, Bearish
  • Drop Down Values: :bullish, :bearish
  • Description: Indicates whether the pattern is Bullish or Bearish.

Conclusion

The Tasuki Gap pattern is a valuable tool for traders to identify the continuation of the current trend. By recognizing the gap and subsequent continuation candles, traders can adjust their strategies to align with the prevailing market trend.