Abandoned Baby
Advance Block
Belt Hold
Dark Cloud Cover
Doji Star
Dragonfly Doji
Downside Gap Three Methods
Downside Tasuki Gap
Evening Doji Star
Evening Star
Falling Three Methods
Gravestone Doji
Hanging Man
Harami Cross
Identical Three Crows
In Neck
Meeting Lines
On Neck
Separating Lines
Shooting Star
Side By Side White Lines
Three Black Crows
Three Inside Down
Three Line Strike
Three Outside Down
Tri Star
Two Crows
Upside Gap Two Crows

Downside Gap Three Methods
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Pattern: continuation
Reliability: moderate

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.

The Psychology
In a downtrend a gap simply gets filled. As long as the black candles have higher volume than the white, the one white profit taking day for the shorts shouldn't be a big concern. The downtrend should continue if indeed the stock is as weak as it appears.

The bearish Downside Gap Three Methods is similar to the bearish Downside Tasuki Gap.

APD was going nowhere when if formed a bearish Downside Gap Three Methods pattern. Essentially the stock was trying to bounce prior to hitting support, but that obviously didn't happen. If you were short and the white day occurs on light volume as it did here, there is no reason to cover just yet. But when the stock falls to support, then you better be ready to cover is the stock bounces.

TNE pulled back from resistance and formed a bearish Downside Gap Three Methods pattern while attempting to move up again. After one more attempt on less than average volume, resistance held and the stock fell. Once again, don't blindly trade these candle formations in a vacuum. Make sure you check out the longer term charts and the overall market.

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