what is the upside downside gap three methods 
the gap three methods is a three bar japanese candlestick pattern that indicates a continuation of the current trend it is a variant of the upside tasuki gap pattern but the third candle completely closes the gap between the first two candles breaking down the upside downside gap three methodsthe upside gap three methods is a bullish continuation pattern with the following characteristics the downside gap three methods is a bearish continuation pattern with the following characteristics the upside downside gap three methods is a rare but reasonably reliable pattern when identified traders should apply other forms of technical analysis to seek confirmation such as price action and technical indicators upside gap three methods trader psychologysuppose the market is engaged in a current uptrend the rally continues on the first candle in a healthy session with the close well above the open generating a wide range real body this increases the bull s confidence while putting bears on the defensive their caution is justified because the second candle opens with a gap up and healthy buying pressure that lifts the security to a new high profit taking causes the third candle to close the gap between the first and second candles the bulls assume the uptrend will resume now that the gap has filled downside gap three methods trader psychologynow suppose the market is engaged in a current downtrend the decline continues on the first candle in a weak session with the close well below the open generating a wide range real body this increases the bear s confidence while putting bulls on the defensive their caution is justified because the second candle opens with a down gap and active selling pressure that drops the security to a new low short covering causes the third candle to close the gap between the first and second candles the bears assume the downtrend will resume now that the gap has filled practical example of trading a gap three methods patternpaul has spotted an upside gap three methods pattern on the chart of cellectis s a and wants to use the formation to enter a long position in the direction of the trend and set his risk parameters he could execute a trade at the closing price of the third candle at 16 39 and place a stop loss order below the first candle s low at 15 75 david may decide to take a more conservative approach and enter a buy stop order slightly above the second candle s high at 16 95 waiting for confirmation that the uptrend has resumed he could then use the low of the third candle at 16 27 as a stop loss point investopedia does not provide tax investment or financial services and advice the information is presented without consideration of the investment objectives risk tolerance or financial circumstances of any specific investor and might not be suitable for all investors past performance is not indicative of future performance investing involves risk including the possible loss of principal 