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. Exhaustion

    Situation in which a majority of participants trading in the ...
  2. Gap

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

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

    Three gaps patterns appear in price charts when three separate gaps occur within the same trend. In Japanese candlestick ... Read Full Answer >>
  2. How effective is creating trade entries after spotting a Sanku (Three Gaps) Pattern?

    The sanku pattern, also known as the three gaps pattern, is unusual among reversal signals. Because it is comprised of three ... Read Full Answer >>
  3. How do I build a profitable strategy when spotting an Sanku (Three Gaps) Pattern ...

    A trading strategy that can be used when a trader recognizes a sanku pattern seeks to profit from a market reversal. The ... Read Full Answer >>
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