Overview of Downside Tasuki Gap Candlestick Pattern
The Downside Tasuki Gap is a bearish continuation candlestick pattern that is typically observed in a downtrend and indicates the likelihood of the continuation of that trend. It is composed of three specific candles, each playing a crucial role in the formation:
- First Candle: A long black (or red) candle, signifying a strong bearish movement. This candle is part of the existing downtrend, confirming the market’s current negative sentiment.
- Second Candle: Another black candle that opens with a gap down from the first candle’s closing. This gap is a vital component of the pattern, emphasizing the continued bearish momentum and the eagerness of sellers to drive the price lower.
- Third Candle: A white (or green) candle, which opens within the body of the second candle and closes within the gap formed between the first and second candles. However, it doesn’t close the gap entirely. This candle represents a brief pause or retracement in the downward movement, but the failure to close the gap suggests that the downward momentum is still dominant.
Importance in Technical Analysis
In technical analysis, the Downside Tasuki Gap candlestick pattern is highly valued for its ability to signal the continuation of a downtrend, offering traders and investors critical insights into market sentiment and momentum. Its importance in the realm of technical analysis can be summarized as follows:
- Confirmation of Bearish Trend Continuation: The Downside Tasuki Gap is primarily significant as it reinforces the ongoing bearish trend in a security’s price. Its appearance gives traders further confirmation that the current downtrend is likely to persist, which is invaluable for decision-making in bearish market phases.
- Timely Entry and Exit Signals: This pattern provides traders with potential entry points for short positions or signals to exit long positions. By recognizing the continuation of a downtrend, traders can make timely decisions to capitalize on the expected downward price movement.
- Enhances Risk Management: Identifying a Downside Tasuki Gap pattern can aid in risk management strategies. Traders might use this pattern to place stop-loss orders more effectively, thereby minimizing potential losses in a bearish market.
- Strengthens Analytical Approach: When combined with other technical analysis tools, such as trendlines, oscillators, and volume analysis, the Downside Tasuki Gap can offer a more comprehensive view of the market. It adds depth to technical analysis by contributing to a multi-faceted approach to understanding market movements.
- Psychological Insight: The pattern provides insight into market psychology. The initial gap down indicates strong selling pressure, while the inability of the third candle to close the gap shows a lack of sufficient buying interest, reinforcing the bearish sentiment.
Example From Trading View
Defining the Downside Tasuki Gap Candlestick Pattern Criteria
The Downside Tasuki Gap candlestick pattern is a bearish continuation pattern observed in technical analysis, and it has specific criteria for its formation. Recognizing this pattern involves looking for a particular arrangement of three candles within a downtrend. Here are the defining criteria for the Downside Tasuki Gap pattern:
- Prevailing Downtrend: The pattern occurs within the context of an existing downtrend. This is crucial as it indicates that the market is already in a bearish phase.
- First Candle: The pattern starts with a long black (or red) candle. This candle is a continuation of the bearish trend, reflecting strong selling pressure.
- Second Candle: The second candle is also a black candle. It opens lower than the closing price of the first candle, creating a gap down. This gap is a key feature and signifies continued selling pressure in the market.
- Third Candle: The third candle is a white (or green) candle that opens within the body of the second candle but does not close the gap between the first and second candles. It should close within the gap but not above the closing price of the first candle. This candle represents a slight bullish recovery or pause in the downtrend but is insufficient to indicate a trend reversal.
- Gap Maintenance: The gap between the first and second candles should not be filled by the third candle. The maintenance of this gap is essential to confirm the pattern’s validity as a bearish continuation signal.
Code For Detecting Downside Tasuki Gap
//@version=5 indicator("Downside Tasuki Gap - Bearish", shorttitle = "Downside Tasuki Gap", overlay=true) C_DownTrend = true C_UpTrend = true var trendRule1 = "SMA50" var trendRule2 = "SMA50, SMA200" var trendRule = input.string(trendRule1, "Detect Trend Based On", options=[trendRule1, trendRule2, "No detection"]) if trendRule == trendRule1 priceAvg = ta.sma(close, 50) C_DownTrend := close < priceAvg C_UpTrend := close > priceAvg if trendRule == trendRule2 sma200 = ta.sma(close, 200) sma50 = ta.sma(close, 50) C_DownTrend := close < sma50 and sma50 < sma200 C_UpTrend := close > sma50 and sma50 > sma200 C_Len = 14 // ta.ema depth for bodyAvg C_ShadowPercent = 5.0 // size of shadows C_ShadowEqualsPercent = 100.0 C_DojiBodyPercent = 5.0 C_Factor = 2.0 // shows the number of times the shadow dominates the candlestick body C_BodyHi = math.max(close, open) C_BodyLo = math.min(close, open) C_Body = C_BodyHi - C_BodyLo C_BodyAvg = ta.ema(C_Body, C_Len) C_SmallBody = C_Body < C_BodyAvg C_LongBody = C_Body > C_BodyAvg C_UpShadow = high - C_BodyHi C_DnShadow = C_BodyLo - low C_HasUpShadow = C_UpShadow > C_ShadowPercent / 100 * C_Body C_HasDnShadow = C_DnShadow > C_ShadowPercent / 100 * C_Body C_WhiteBody = open < close C_BlackBody = open > close C_Range = high-low C_IsInsideBar = C_BodyHi[1] > C_BodyHi and C_BodyLo[1] < C_BodyLo C_BodyMiddle = C_Body / 2 + C_BodyLo C_ShadowEquals = C_UpShadow == C_DnShadow or (math.abs(C_UpShadow - C_DnShadow) / C_DnShadow * 100) < C_ShadowEqualsPercent and (math.abs(C_DnShadow - C_UpShadow) / C_UpShadow * 100) < C_ShadowEqualsPercent C_IsDojiBody = C_Range > 0 and C_Body <= C_Range * C_DojiBodyPercent / 100 C_Doji = C_IsDojiBody and C_ShadowEquals patternLabelPosLow = low - (ta.atr(30) * 0.6) patternLabelPosHigh = high + (ta.atr(30) * 0.6) label_color_bearish = input(color.red, "Label Color Bearish") C_DownsideTasukiGapBearishNumberOfCandles = 3 C_DownsideTasukiGapBearish = false if C_LongBody[2] and C_SmallBody[1] and C_DownTrend and C_BlackBody[2] and C_BodyHi[1] < C_BodyLo[2] and C_BlackBody[1] and C_WhiteBody and C_BodyHi <= C_BodyLo[2] and C_BodyHi >= C_BodyHi[1] C_DownsideTasukiGapBearish := true alertcondition(C_DownsideTasukiGapBearish, title = "New pattern detected", message = "New Downside Tasuki Gap – Bearish pattern detected") if C_DownsideTasukiGapBearish var ttBearishDownsideTasukiGap = "Downside Tasuki Gap\nDownside Tasuki Gap is a three-candle pattern found in a downtrend that usually hints at the continuation of the downtrend. The first candle is long and red, followed by a smaller red candle with its opening price that gaps below the body of the previous candle. The third candle is green and it closes inside the gap created by the first two candles, unable to close it fully. The bull’s inability to close that gap hints that the downtrend might continue." label.new(bar_index, patternLabelPosHigh, text="Downside Tasuki Gap", style=label.style_label_down, color = label_color_bearish, textcolor=color.white, tooltip = ttBearishDownsideTasukiGap) bgcolor(ta.highest(C_DownsideTasukiGapBearish?1:0, C_DownsideTasukiGapBearishNumberOfCandles)!=0 ? color.new(color.red, 90) : na, offset=-(C_DownsideTasukiGapBearishNumberOfCandles-1))
Output
Overview of the script
1. Indicator Setup
//@version=5 indicator("Downside Tasuki Gap - Bearish", shorttitle = "Downside Tasuki Gap", overlay=true)
@version=5
: Specifies Pine Script version 5.indicator(...)
: Declares the script as an indicator, names it “Downside Tasuki Gap – Bearish”, and ensures it overlays on the price chart.
2. Trend Definition and User Input
C_DownTrend = true C_UpTrend = true var trendRule1 = "SMA50" var trendRule2 = "SMA50, SMA200" var trendRule = input.string(trendRule1, "Detect Trend Based On", options=[trendRule1, trendRule2, "No detection"])
- Initializes variables
C_DownTrend
andC_UpTrend
. - Defines two trend detection methods:
"SMA50"
and"SMA50, SMA200"
. input.string(...)
: Allows the user to choose a trend detection method.
3. Trend Calculation
if trendRule == trendRule1 priceAvg = ta.sma(close, 50) C_DownTrend := close < priceAvg C_UpTrend := close > priceAvg if trendRule == trendRule2 sma200 = ta.sma(close, 200) sma50 = ta.sma(close, 50) C_DownTrend := close < sma50 and sma50 < sma200 C_UpTrend := close > sma50 and sma50 > sma200
- Applies the selected trend rule to define the market trend.
- Uses Simple Moving Averages (SMA) for trend calculation based on the user’s choice.
4. Candlestick Analysis Criteria
C_Len = 14 // ta.ema depth for bodyAvg C_ShadowPercent = 5.0 // size of shadows C_ShadowEqualsPercent = 100.0 C_DojiBodyPercent = 5.0 C_Factor = 2.0 // shows the number of times the shadow dominates the candlestick body C_BodyHi = math.max(close, open) C_BodyLo = math.min(close, open) C_Body = C_BodyHi - C_BodyLo C_BodyAvg = ta.ema(C_Body, C_Len) C_SmallBody = C_Body < C_BodyAvg C_LongBody = C_Body > C_BodyAvg C_UpShadow = high - C_BodyHi C_DnShadow = C_BodyLo - low C_HasUpShadow = C_UpShadow > C_ShadowPercent / 100 * C_Body C_HasDnShadow = C_DnShadow > C_ShadowPercent / 100 * C_Body C_WhiteBody = open < close C_BlackBody = open > close C_Range = high-low C_IsInsideBar = C_BodyHi[1] > C_BodyHi and C_BodyLo[1] < C_BodyLo C_BodyMiddle = C_Body / 2 + C_BodyLo C_ShadowEquals = C_UpShadow == C_DnShadow or (math.abs(C_UpShadow - C_DnShadow) / C_DnShadow * 100) < C_ShadowEqualsPercent and (math.abs(C_DnShadow - C_UpShadow) / C_UpShadow * 100) < C_ShadowEqualsPercent C_IsDojiBody = C_Range > 0 and C_Body <= C_Range * C_DojiBodyPercent / 100 C_Doji = C_IsDojiBody and C_ShadowEquals
- Sets parameters like
C_Len
for EMA depth. - Calculates candle properties like body size, shadows, and color (black or white).
5. Downside Tasuki Gap Detection Logic
if C_LongBody[2] and C_SmallBody[1] and C_DownTrend and C_BlackBody[2] and C_BodyHi[1] < C_BodyLo[2] and C_BlackBody[1] and C_WhiteBody and C_BodyHi <= C_BodyLo[2] and C_BodyHi >= C_BodyHi[1] C_DownsideTasukiGapBearish := true
- This part of the script initializes the `C_DownsideTasukiGapBearish` variable as `false`. It will be set to `true` if the criteria for the Downside Tasuki Gap pattern are met.
- The `if` statement checks for the specific sequence and characteristics of the three candles that form the Downside Tasuki Gap.
- The candle from two periods ago (`[2]`) must be a long black (red) body (`C_LongBody[2]`), indicating a strong bearish move.
- The subsequent candle (`[1]`) is also black (`C_BlackBody[1]`), but smaller in size (`C_SmallBody[1]`), and opens below the low of the previous long black candle (`C_BodyHi[1] < C_BodyLo[2]`).
- The current candle must be white (green) (`C_WhiteBody`), indicating a bullish move. It opens within the body of the previous candle and closes within the gap between the first and second candles, but crucially, does not close the gap entirely (`C_BodyHi <= C_BodyLo[2] and C_BodyHi >= C_BodyHi[1]`).
- These conditions collectively confirm the presence of the Downside Tasuki Gap pattern, provided the market is in a downtrend (`C_DownTrend`).
6. Alert Condition
alertcondition(C_DownsideTasukiGapBearish, title = "New pattern detected", message = "New Downside Tasuki Gap – Bearish pattern detected")
- Sets an alert that triggers when the Downside Tasuki Gap pattern is identified. This feature is particularly useful for traders who might not constantly monitor the charts, as it provides a timely notification.
7. Label and Background Coloring
if C_DownsideTasukiGapBearish var ttBearishDownsideTasukiGap = "Downside Tasuki Gap\nDownside Tasuki Gap is a three-candle pattern found in a downtrend that usually hints at the continuation of the downtrend. The first candle is long and red, followed by a smaller red candle with its opening price that gaps below the body of the previous candle. The third candle is green and it closes inside the gap created by the first two candles, unable to close it fully. The bull’s inability to close that gap hints that the downtrend might continue." label.new(bar_index, patternLabelPosHigh, text="Downside Tasuki Gap", style=label.style_label_down, color = label_color_bearish, textcolor=color.white, tooltip = ttBearishDownsideTasukiGap) bgcolor(ta.highest(C_DownsideTasukiGapBearish?1:0, C_DownsideTasukiGapBearishNumberOfCandles)!=0 ? color.new(color.red, 90) : na, offset=-(C_DownsideTasukiGapBearishNumberOfCandles-1))
- When
C_DownsideTasukiGapBearish
is true, indicating the pattern is detected, this code creates a label on the chart. The label, positioned atpatternLabelPosHigh
, will display “Downside Tasuki Gap” with the predefined style and color settings (label_color_bearish
for the label color and white for the text color). Thetooltip
(ttBearishDownsideTasukiGap
) provides a brief description of the pattern. - The
bgcolor
function is used to change the background color of the chart bars where the pattern is detected. It checks if the pattern has occurred within the lastC_DownsideTasukiGapBearishNumberOfCandles
number of candles. If so, it sets the background color to a semi-transparent red, enhancing the visual representation of the pattern on the chart.
Frequently Asked Questions
This code automatically detects the Downside Tasuki Gap pattern in trading charts, signaling a continuation of a downtrend.
The script uses Simple Moving Averages (SMA50 alone or SMA50 and SMA200 together) to determine the market trend.
The pattern is defined by a sequence of three candles: two long bearish candles followed by a smaller bullish candle that does not close the gap.
Yes, it triggers an alert when the Downside Tasuki Gap pattern is identified.
Yes, the script allows customization in trend determination and visual aspects like label color.
Conclusion
This script is designed for detecting the Downside Tasuki Gap candlestick pattern in financial market charts, providing traders with a powerful tool for identifying bearish continuation signals within a downtrend. It utilizes Simple Moving Averages (SMA50 or a combination of SMA50 and SMA200) to determine the prevailing market trend, ensuring the pattern is recognized in the correct context. The script’s core functionality lies in its ability to automatically detect the specific sequence of candles that form the Downside Tasuki Gap, thereby alerting traders to potential trading opportunities. Additionally, it offers customization options and enhances chart visualization with labels and background coloring, making it a versatile and user-friendly tool for technical analysis in trading. This combination of automated detection, alerting capabilities, and visual enhancements makes the script an invaluable asset for traders looking to leverage technical analysis in their trading strategies.