The first two strong bearish candles with a downside gap confirm heavy selling. The third candle shows a small upward move (pullback), but the recovery is weak. Buyers are not strong enough to fill the entire gap or reverse the downtrend. This signals the downtrend is likely to continue after the brief pause.

How to identify The Downside Gap Three Methods

First Candle

A strong bearish candle

Appears during an existing downtrend

Second Candle

Another bearish candle

Opens below the low of the first candle (creates a downside gap)

Shows strong bearish sentiment

Third Candle

A bullish or small candle that moves upward into the gap

But does NOT close above the first candle’s close

This is a minor retracement but not strong enough to reverse the trend

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