Ever stared at your trading screen wondering if that weird gap pattern means you should buy or run for the hills?
You’re not alone.
I’ve been there.
Watching prices jump around like a caffeinated monkey.
Not knowing if I should trust what I’m seeing.
Here’s the thing about the upside tasuki gap candlestick pattern.
It’s one of those patterns that can make or break your trading day.
And most people get it completely wrong.
What Is the Upside Tasuki Gap Pattern?
Picture this.
You’re watching a stock that’s been climbing.
Then boom.
A gap appears.
Not just any gap.
A specific three-candle formation that tells a story.
The upside tasuki gap is a bearish reversal pattern that shows up during uptrends.
It’s like a warning sign saying “Hey, maybe slow down a bit.”
Here’s how it works:
First candle: Long white (green) candle shooting upward Second candle: Another white candle that gaps up from the first one Third candle: Black (red) candle that fills part of the gap but doesn’t close it completely
Think of it like a runner who sprints hard, takes another big leap, then stumbles but doesn’t fall completely.
The pattern got its name from Japanese rice traders centuries ago.
“Tasuki” means a cord used to tie up sleeves.
Smart traders, those Japanese folks.
How to Spot an Upside Tasuki Gap in Real Trading
I remember the first time I spotted this pattern.
It was on Reliance Industries back in 2019.
The stock had been climbing for weeks.
Then this exact formation showed up.
Three candles.
Perfect textbook example.
Here’s what to look for:
The Setup Checklist
Strong uptrend in progress
- Stock should be in a clear upward movement
- Higher highs and higher lows
- Good volume backing the moves
Gap up opening
- Second candle opens above the first candle’s high
- Clear space between the candles
- No overlapping shadows
Partial gap fill
- Third candle opens within the second candle’s body
- Closes below the second candle’s open
- But stays above the first candle’s high
The volume tells the real story.
If volume drops on the third candle, the pattern gets stronger.
It’s like the market is saying “We’re tired of buying up here.”
The Psychology Behind This Pattern
Here’s what’s really happening inside traders’ minds.
Day one: Everyone’s excited. Buying like crazy. Stock rockets up.
Day two: FOMO kicks in. More buyers jump in. Stock gaps higher.
Day three: Reality check. Some profit-taking begins. Price drops but not completely.
It’s human nature.
We get greedy.
Then we get scared.
This pattern captures that exact emotional shift.
The gap shows strength.
The pullback shows doubt creeping in.
Smart money often starts selling here.
Retail traders often keep buying.
Guess who usually wins?
Trading Strategy for Upside Tasuki Gap
Let me share the exact strategy I use.
No fancy indicators needed.
Just pure price action.
Entry Strategy
Wait for confirmation
- Never trade on the pattern alone
- Look for the next candle to close red
- This confirms the reversal
Entry points:
- Conservative: Enter after confirmation candle
- Aggressive: Enter at the close of the third candle
Position sizing:
- Risk only 1-2% of your account
- This pattern can fail
- Size accordingly
Stop Loss Placement
Here’s where most people mess up.
They place stops too tight.
The market loves to hunt stops.
Stop loss levels:
- Above the second candle’s high
- Give it breathing room
- Add 0.5% buffer for Indian markets
I learned this the hard way.
Lost money on tight stops more times than I care to count.
Market makers know where your stops are.
Don’t make it easy for them.
Profit Targets
Target 1: 50% of the gap distance Target 2: Full gap closure Target 3: Previous support level
Scale out at each target.
Take some profits off the table.
Let the rest ride with a trailing stop.
This approach saved my account multiple times.
Greed kills more traders than bad patterns ever will.
Real Examples from Indian Markets
Tata Motors – March 2023
Perfect upside tasuki gap formation.
Stock was trending up from ₹380 to ₹420.
Gap appeared at ₹435 level.
Third candle partially filled the gap.
Reversal followed for next 5 trading sessions.
Dropped to ₹395.
That’s a 9% move.
Not bad for a few days’ work.
HDFC Bank – August 2022
Another classic example.
Bank was in strong uptrend.
Gap formed around ₹1,540.
Pattern completed perfectly.
Stock reversed and touched ₹1,485.
Quick 3.5% profit.
These patterns work across timeframes.
I’ve seen them on 15-minute charts.
I’ve seen them on daily charts.
The psychology remains the same.
Common Mistakes to Avoid
Mistake #1: Trading without confirmation
Don’t jump in on the third candle.
Wait for the next candle to confirm.
Patience pays in trading.
Mistake #2: Ignoring the overall trend
This is a reversal pattern.
But trends are powerful.
Sometimes the uptrend just continues.
Always check the bigger picture.
Mistake #3: Poor risk management
Never risk more than you can afford to lose.
This pattern fails sometimes.
That’s just trading.
Plan for failure.
Hope for success.
Mistake #4: Chasing every pattern
Not every gap is worth trading.
Look for quality setups.
Volume matters.
Context matters.
Patience matters most.
Advanced Tips for Better Results
Volume Analysis
High volume on gap day: Strong pattern Low volume on gap day: Weak pattern Declining volume on third day: Very strong pattern
Volume is like the heartbeat of the market.
It tells you if the move is real or fake.
Market Context
Bull market: Pattern less reliable Bear market: Pattern more reliable Sideways market: Best environment for this pattern
Context is everything in trading.
Same pattern can give opposite results in different market conditions.
Time of Day Matters
Morning gaps: Often get filled Afternoon gaps: Usually stick Last hour gaps: Next day tells the story
I’ve noticed this over years of trading.
Morning emotions run high.
Afternoon brings clarity.
Risk Management Rules
Here’s my exact risk management framework.
Use it.
Don’t modify it.
It works.
Position Sizing
Account size under ₹1 lakh: Risk ₹1,000 max per trade Account size ₹1-5 lakhs: Risk 1% max per trade Account size above ₹5 lakhs: Risk 0.5% max per trade
Start small.
Stay small.
Survive first.
Profit second.
Stop Loss Rules
Never move stops against you Always honor your stops No exceptions No emotions
The market doesn’t care about your feelings.
Your stops are your lifeline.
Respect them.
Take Profit Strategy
Take 30% at first target Take 40% at second target Let 30% ride with trailing stop
This approach keeps you sane.
And profitable.
Greed is the enemy of good trading.
Combining with Other Indicators
RSI Confirmation
Look for RSI above 70 when the pattern forms.
This shows overbought conditions.
Adds weight to the reversal signal.
Moving Average Context
Price above 20 EMA: Caution mode Price above 50 EMA: Higher probability pattern Price above 200 EMA: Best setup
Moving averages show the trend strength.
Use them as your compass.
Support and Resistance
Pattern works best near resistance levels.
Check your charts for:
- Previous highs
- Round numbers
- Fibonacci levels
- Trendline resistance
These act like magnets for reversals.
When This Pattern Fails
Not all patterns work.
This one included.
Here’s when it usually fails:
Strong trending markets Low volume environments News-driven moves Earnings season Market manipulation
Failed patterns teach you more than successful ones.
I learned this lesson trading IRCTC in 2021.
Perfect pattern formation.
Then the stock announced a bonus issue.
Pattern became useless overnight.
News trumps patterns.
Every single time.
Building Your Trading Plan
Pre-Market Checklist
Scan for gap-up stocks Check overnight news Review support/resistance levels Set alerts for pattern completion
Preparation beats luck every time.
During Market Hours
Monitor volume closely Watch for pattern completion Have entry orders ready Stay disciplined
Trading is a business.
Treat it like one.
Post-Market Review
Analyze your trades Note what worked Learn from mistakes Plan for tomorrow
This is where real improvement happens.
Most traders skip this step.
Don’t be most traders.
Sector-Specific Considerations
Banking Stocks
Banks love to form these patterns.
Especially around RBI policy dates.
HDFC Bank, ICICI Bank, SBI are frequent players.
Higher success rate in banking sector.
IT Stocks
TCS, Infosys, Wipro show these patterns often.
Usually around earnings time.
Global cues matter more here.
Watch US tech stocks for clues.
Pharma Stocks
Dr. Reddy’s, Sun Pharma, Cipla.
Regulatory news can kill patterns here.
Be extra careful with pharma trades.
News flow is unpredictable.
Market Timing Strategies
Best Time Frames
15-minute charts: Quick scalps Hourly charts: Intraday swings Daily charts: Position trades
Each timeframe needs different approach.
Pick one.
Master it.
Then expand.
Seasonal Patterns
April-May: Tax selling pressure October-November: Festival buying December: Year-end positioning
Indian markets have unique seasonal behaviors.
Use them to your advantage.
Technology Tools for Pattern Recognition
Charting Platforms
TradingView: Best for pattern recognition Zerodha Kite: Good for Indian markets MetaTrader: Advanced tools available
Pick one platform.
Learn it inside out.
Jumping between platforms creates confusion.
Alert Systems
Set up alerts for:
- Gap-up stocks
- Volume spikes
- Pattern completion
Technology should work for you.
Not against you.
Common Variations
Strong Tasuki Gap
All three candles have long bodies.
Higher reliability.
Stronger reversal signal.
Weak Tasuki Gap
Small candle bodies.
Lower reliability.
Wait for confirmation.
Modified Tasuki Gap
Slight variations in gap size.
Still valid if psychology remains same.
Don’t get too rigid with definitions.
Integration with Portfolio Management
Position Allocation
Never put more than 5% in pattern-based trades.
These are tactical moves.
Not strategic investments.
Correlation Management
Don’t trade multiple correlated stocks with same pattern.
If Nifty Bank falls, all bank stocks fall.
Diversify your pattern trades.
Hedging Strategies
Consider index puts when trading individual stocks.
Protect against market-wide moves.
Smart money always hedges.
The Psychological Game
Trading is 80% psychology.
20% technique.
This pattern tests your discipline.
When it works: Don’t get overconfident When it fails: Don’t get discouraged
Both reactions will hurt you.
Stay neutral.
Stay consistent.
The market rewards consistency over brilliance.
Building Pattern Recognition Skills
Start with paper trading.
Practice on historical charts.
Keep a trading journal.
Note every pattern you see.
Good or bad.
Your pattern recognition muscle grows with practice.
Like any other skill.
No shortcuts exist.
Final Thoughts
The upside tasuki gap candlestick pattern isn’t magic.
It’s just one tool in your trading toolkit.
Use it wisely.
Combine it with other analysis.
Manage your risk religiously.
And remember.
The market doesn’t care about your mortgage payment.
Trade accordingly.
Master this pattern.
But don’t rely on it exclusively.
The best traders use multiple signals.
This is just one piece of the puzzle.
But it’s a powerful piece when used correctly.
Frequently Asked Questions (FAQs)
Q: How reliable is the upside tasuki gap pattern?
The pattern works about 65-70% of the time in trending markets. Success rates drop in choppy or highly volatile conditions. Always use proper risk management regardless of pattern reliability.
Q: Can I trade this pattern in crypto markets?
Yes, but crypto markets are more volatile and patterns can fail more frequently. Use smaller position sizes and wider stops when trading crypto with this pattern.
Q: What’s the minimum gap size needed for this pattern?
The gap should be at least 0.5% of the stock price for meaningful signals. Smaller gaps often get filled quickly and don’t provide reliable reversal signals.
Q: Should I trade this pattern during earnings season?
Generally avoid trading any technical patterns during earnings announcements. News and fundamentals can override technical signals completely.
Q: How long does the reversal typically last?
Reversals from this pattern usually last 3-10 trading sessions. The stronger the preceding uptrend, the longer the potential reversal.
Q: Can this pattern appear in downtrends?
No, this specific pattern only appears in uptrends. The equivalent pattern in downtrends is called the “downside tasuki gap” and signals potential upward reversals.
Q: What broker platforms work best for identifying these patterns?
Most modern platforms like Zerodha Kite, Angel Broking, or TradingView can identify these patterns. TradingView offers the best pattern recognition tools for serious traders.
Q: Is this pattern suitable for beginners?
Yes, but start with paper trading first. The pattern is relatively straightforward to identify, but proper risk management is crucial for success.
