Sanku (Three Gaps) Pattern

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DEFINITION of 'Sanku (Three Gaps) Pattern'

The Japanese word for a candlestick pattern that consists of three individual gaps located within a well-defined trend. After the appearance of the third gap, the pattern is used to suggest an impending reversal in the direction of the current trend.

INVESTOPEDIA EXPLAINS 'Sanku (Three Gaps) Pattern'

This pattern is used by traders to predict situations of exhaustion and change in a trend. Ultimately, the current trend is said to be reversed when the price of the asset fills the third gap. Technical traders should not rely solely on the three gaps pattern to predict a reversal; rather, they should combine this technique with other technical indicators.

RELATED TERMS
  1. Gap

    A break between prices on a chart that occurs when the price ...
  2. Trend

    The general direction of a market or of the price of an asset. ...
  3. Exhaustion

    Situation in which a majority of participants trading in the ...
  4. Reversal

    A change in the direction of a price trend. On a price chart, ...
  5. Pattern

    In technical analysis, the distinctive formation created by the ...
  6. Candlestick

    A chart that displays the high, low, opening and closing prices ...
RELATED FAQS
  1. How are Sanku (Three Gaps) patterns interpreted by analysts and traders?

    Find out how analysts and traders interpret a Sanku, or three gaps, pattern located within a bar chart or Japanese candlestick ...
  2. How effective is creating trade entries after spotting a Sanku (Three Gaps) Pattern?

    Learn about the sanku, or three gaps, pattern including formation, interpretation and additional confirmation necessary to ...
  3. How do I build a profitable strategy when spotting an Sanku (Three Gaps) Pattern ...

    Understand the interpretation of the sanku candlestick pattern and learn how to create a profitable trading strategy based ...
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