To continue the candlesticks topic, lets now talk about candlestick continuation patterns.
Upide & Downside Tasuki Gap
There’s a gap between two candlestick with the same color (in the direction of the trend). The third candlestick opens within the second body and closes WITHIN the gap.
Side by side white lines
Bullish Side by Side white lines continuation pattern consists of 3 white candlesticks and doesn’t require any confirmation. The second and third candlestick should have about equal open prices and both should have a gap between them and the first candlestick. The second and third candlesticks should also have similar heights. Bearish side by side white lines continueation pattern does need some sort of confirmation as well. In its shape it’s exactly the opposite to the bullish pattern but the first candlestick is filled while the second and third candlesticks are still empty. The gap in both cases should be in the direction of the trend.
Rising Three Methods and Falling Three Methods
This continuation pattern consists of 5 candlesticks. Not that both in bullish and bearish case the color (whether it’s filled or empty) of the THIRD body does not matter. The first candlestick in both cases should represent the existing trend and they are ideally followed by 3 small bodies ideally all of the opposite colour. All these 3 small bodies should be within the high-low range of the first candlesticks and should be rising or falling in the opposite direction of the trend. The fifth candlestick should close above the first candlestick (in case of bullish pattern).
Two candlesticks with opposite colors, exactly the opposite to Meeting Lines we have talked about before. The first day should be the OPPOSITE to the current trend.
Mat Hold is a Bullish Continuation pattern. It is similar to the Rising Three Methods – the third candlestick again can be whether empty or filled and the 3 middles small bodies should be going in the opposite direction of the trend. However, while in case of Rising three methods the three small bodies had to be within the high-low range of the first candlestick then this is not the case anymore. The second body (first small one) doesn’t have to be within the first body (actually there should even have a gap between them) and the third body only touches the first body just a bit. The fourth body should have already a bigger part within the first day’s range. And the fifth body is empty again and should close above all the previous candlesticks. This pattern is considered a better signal than the Rising Three Method.
Upside Gap Three Methods and Downside Gap Three Methods
These Japanese Candlestick pattern names seem to be going only worse, at least that’s what it looks to me. Why couldn’t it just be something like...BONGO. Well, just to make it all easier to remember. I check the Japanese version as well in hopes that this is a short version of the name...but no, it’s „uwa banare sampoo hatsu oshi” and the opposite ...
Ok, BULLISH BONGO or Upside Gap Three Methods...I prefer the first version, my own one, but I guess for the clarity of it all, lets stick to the original names and lets go on.
This pattern consists of 3 candlesticks, first two being the colour and direction of the market trend but with a gap between them and the third one should be of a opposite color that opens within the second candlestick’s body and closes within the fist candlestick’s body – meaning it also fills the gap.
This is a Bearish continuation pattern with a very simple look. First long body is a filled one followed by upper-shadowless smaller white body that closes on the previous day’s low.
This pattern looks exactly like the On Neck pattern with one difference – when On Neck’s second day closes on the previous day’s low then In Neck second day closes on the previous day’s Close (or slightly above the close, so barely within the body of the first day). Otherwise it’s the same. And this is also a Bearish continuation pattern.
Another similar Bearsish continuation pattern with a difference that it closes within the body of the first day but doesn’t really manage to get above the middle point of the first day’s body. Note that on the picture the second body should be just a bit lower.
Note that many of these patterns – both reversal and continuation patterns do require a confirmation. Even though if some of them don’t, it is still suggestable.