Three Gaps Up / Three Rising Windows
Reference values based on Bulkowski's "Encyclopedia of Chart Patterns". Data is primarily from U.S. markets and may differ for other markets.
A pattern featuring three consecutive upward gaps during an uptrend. One of the traditional Sakata methods, it indicates that buying enthusiasm has reached an extreme, signaling a potential top reversal. When a bearish candle appears after the third gap, the probability of a selling reversal increases.
Enter short when a bearish candle confirms after the third gap. For a more cautious approach, enter when price drops below the reversal candle's low. Higher volume on the reversal candle increases reliability.
First target: project the combined range of the three gaps downward from the reversal candle's close. Second target: the lower edge of the first gap. The level where the first gap is filled is also a strong target from a gap-filling perspective.
Place a stop-loss slightly above the high of the candle that formed the third gap. If the upper edge of the third gap is clearly exceeded, the pattern is invalid; exit.
Volume typically increases progressively across the three gaps, especially surging at the third gap. This represents a buying climax. High volume on the reversal bearish candle enhances the selling reversal's reliability.