DEFINITION of 'Downside Tasuki Gap'

A candlestick formation that is commonly used to signal the continuation of the current downtrend. The pattern is formed when a series of candlesticks have demonstrated the following characteristics:

1. The first bar is a red candlestick within a defined downtrend.
2. The second bar is another red candlestick that has gapped below the close of the previous bar.
3. The last bar is a white candlestick that closes within the gap of the first two bars. It is important to note that the white candle does not need to fully close the gap.

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BREAKING DOWN 'Downside Tasuki Gap'

In technical analysis, it is not uncommon to see the price of the asset close the gap created in the price. Sometimes traders get ahead of themselves and send the price lower too quickly, which can result in a slight retracement. The white candlestick that forms the downside tasuiki gap is as a period of slight consolidation before the bears continue to send the price lower.

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