Candlestick Patterns
Resources for Advanced Trading

Candlestick Bullish Three Gaps Pattern

Candlestick Patterns

The Bullish Three Gaps pattern is an exhaustion pattern after, in some cases, and entended move. The image shown here is an "ideal" type of illustration. Four white candles with gaps between the range of the candles. Another form would be when you have an extended uptrend (5~100+ bars in a defined uptrend) and you can identify three unique gaps in price action. It does not matter how many bars are inbetween the gaps. All that matters is there are three gaps in a defined trend.

Now, when this happens, you should look for exhaustion of the trend and potential sell/reversal signals. This pattern shows the bullish trend should end soon, thus you need to start looking to the best bearish trend reversals.

If this pattern is found after a nice long extended uptrend, then I suggest letting the last price wave settle before trying to "sell right in". Sometimes, the last price wave moves quite a bit after the third gap. It may continue up another 1~3+% before it stops.

This pattern is a setup for an eventual bearish reversal. It is good to use this as a warning that some bearish move should happen in the future - just time it with the other candlesticks and the longer-term charts.

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