Leavitt Brothers: Education - Candle Stick Patterns

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	Abandoned Baby
	Advance Block
	Belt Hold
	Breakaway
	Dark Cloud Cover
	Deliberation
	Doji Star
	Dragonfly Doji
	Downside Gap Three Methods
	Downside Tasuki Gap
	Engulfing
	Evening Doji Star
	Evening Star
	Falling Three Methods
	Gravestone Doji
	Hanging Man
	Harami
	Harami Cross
	Identical Three Crows
	In Neck
	Kicking
	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
	Thrusting
	Tri Star
	Two Crows
	Upside Gap Two Crows

Downside Gap Three Methods

Pattern: continuation
Reliability: moderate

Identification
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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