High Price Gapping Play Candlestick Chart Bullish Continuation Pattern

A high price gapping play occurs when there is a strong bullish candlestick followed by a few small body candlesticks that act as a period of consolidation, and then completed by a strong bullish candlestick that gaps up from the small real body consolidation area. Nison (1991, p. 132) specifically states that the small real body consolidation should not be made up of more than eleven candlesticks.

Low Price Gapping Play Candlestick Chart Bearish Continuation Pattern

A low price gapping play occurs when a consolidation area of small real body candlesticks follows a bearish downtrend and then another bearish candlestick gaps down below the small real body candlestick consolidation area which continues the downtrend.

High Price Gapping Play Candlestick Chart Example

An example of the high price gapping play is shown on the chart above of Bank of America (BAC). A large bullish candlestick is followed by four small real body candlesticks creating an area of consolidation. Thereafter, a large bullish candlestick gaps up from the area of consolidation and resumes the upward trend.

Low Price Gapping Play Candlestick Chart Example

The chart above of the Dow Jones Industrial Average ETF (DIA) illustrates a low price gapping play pattern. After a large bearish candlestick, three small body bearish candlesticks create a period of consolidation. The trend downward continues when a large bearish candlestick gaps below the area of consolidation.

Works Referenced

1. Nison, S. (2003) The Candlestick Course. Hoboken: John Wiley & Sons.
2. Nison, S. (1994) Beyond Candlesticks: New Japanese Charting Techniques Revealed. New York: John Wiley & Sons.
3. Nison, S. (1991) Japanese Candlestick Charting Techniques. New York: New York Institute of Finance.
4. Rhoads, R. (2008) Candlestick Charting For Dummies. Hoboken: Wiley Publishing.
5. ThinkorSwim. (2011). ThinkorSwim Resource Center: Candlestick Patterns Library.