Definition:
Two long black candlesticks with a downward gap between
them appear. They are followed on the third day with
a white candlestick, which manages to close the gap
between the first two. This should be seen as a support
for the downward trend.
Recognition Criteria:
1. Market is characterized by downtrend.
2. We see two long black candlesticks with a gap between
them in the first and second days.
3. Then we see a white candlestick on the third day
characterized with an opening within the body of the
second day.
4. The body of third day candlestick is white and it
fills the gap between the first two days.
Explanation:
The Bearish Downside Gap Three Methods Pattern appears
when the market is moving strongly downward. Downward
move is extended further by another day showing a gap
in the direction of the downtrend. The third day opening
is well within the body of the second day, and it manages
to completely fill the gap. This gap-closing move may
be interpreted as a support level for the current downtrend.
Important Factors:
This Bearish Downside Gap Three Methods Pattern is
a simple pattern with strong similarity with the Bearish
Downside Tasuki Gap Pattern. The only difference is
that in the Bearish Downside Tasuki Gap Pattern, the
gap between the first two days is not filled by a third
day body.
A confirmation of the trend is required in the form
of a black candlestick, a large gap down or a lower
close on the next trading day to be sure that downtrend
is continuing.
