Bearish Downside Gap Three Methods
A long black day is followed by a second long black day that gaps in the direction of the trend. The third day is white and fills the gap between the first two days.
How to identify
- 1st two day are long red days with a gap between them.
- 3rd day is a white day that fills the gap of the 1st two days.
The gap down on the 2nd day gets filled by the 3rd day. More investigation of the previous weeks is recommended in order to see if this is the first gap.
If so, then this pattern is probably displaying short covering to ‘close the gap’ created and the bearish trend should continue.