As of 08/06/2020
  Indus: 27,387 +185.46 +0.7%  
  Trans: 10,331 +115.68 +1.1%  
  Utils: 829 +3.50 +0.4%  
  Nasdaq: 11,108 +109.67 +1.0%  
  S&P 500: 3,349 +21.39 +0.6%  
YTD
-4.0%  
-5.2%  
-5.7%  
 +23.8%  
 +3.7%  
  Targets    Overview: 07/31/2020  
  Up arrow28,150 or 25,000 by 08/15/2020
  Up arrow10,600 or 9,400 by 08/15/2020
  Up arrow870 or 800 by 08/15/2020
  Up arrow11,300 or 10,200 by 08/15/2020
  Up arrow3,355 or 3,100 by 08/15/2020
CPI (updated daily): Arrows on 6/29/20
As of 08/06/2020
  Indus: 27,387 +185.46 +0.7%  
  Trans: 10,331 +115.68 +1.1%  
  Utils: 829 +3.50 +0.4%  
  Nasdaq: 11,108 +109.67 +1.0%  
  S&P 500: 3,349 +21.39 +0.6%  
YTD
-4.0%  
-5.2%  
-5.7%  
 +23.8%  
 +3.7%  
  Targets    Overview: 07/31/2020  
  Up arrow28,150 or 25,000 by 08/15/2020
  Up arrow10,600 or 9,400 by 08/15/2020
  Up arrow870 or 800 by 08/15/2020
  Up arrow11,300 or 10,200 by 08/15/2020
  Up arrow3,355 or 3,100 by 08/15/2020
CPI (updated daily): Arrows on 6/29/20

Bulkowski on the Two Black Gapping Candle Pattern

 

Two Black Gapping Candle: Summary

Two black gapping candle pattern acts as a continuation of the downward price trend. Look for two black candles that gap below the prior one and the second of the two candles has a lower high. That combination is simple enough and it appears often, so you will have no trouble finding it in real time trading or in a historical price series.

The exciting thing about this candlestick is that is performs so well, but a check of the numbers shows that all is not rosy. The two black gapping candles does best after an upward breakout, but performance after downward breakouts really suffers.

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My book, Encyclopedia of Candlestick ChartsEncyclopedia of Candlestick Charts book., pictured on the left, takes an in-depth look at candlesticks, including performance statistics.

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-- Tom Bulkowski

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Important Results
Discussion
Identification Guidelines
Three Trading Tidbits
Example
See Also

Two Black Gapping: Important Results

Theoretical performance: Bearish continuation
Tested performance: Bearish continuation 68% of the time
Frequency rank: 29
Overall performance rank: 10
Best percentage meeting price target: 61% (bull market, up breakout)
Best average move in 10 days: 6.45% (bear market, up breakout)
Best 10-day performance rank: 14 (bull market, up breakout)

All ranks are out of 103 candlestick patterns with the top performer ranking 1. "Best" means the highest rated of the four combinations of bull/bear market, up/down breakouts.

The above numbers are based on hundreds of perfect trades. See the glossary for definitions.

The ideal two black gapping candlestick
Two Black Gapping

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Two Black Gapping: Discussion

The two black gapping candlestick acts as a bearish continuation pattern both in theory and after testing. The overall performance rank is 10, which it near the top (1) out of 103 candle types. The reason for that high score is that upward breakouts do well enough that downward breakouts do not have enough juice to pull the results lower.

The best average move 10 days after the breakout is a rise of 6.45% in a bear market. I consider moves of 6% or higher to be good, so this joins the few candle patterns that make the grade. The best performance rank is 14, which is also high on the list.

Two Black Gapping: Identification Guidelines

CharacteristicDiscussion
Number of candle linesTwo.
Price trend leading to the patternDownward.
ConfigurationLook for a price gap followed by two black candles. The second black candle should have a high below the prior candle's high.

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Two Black Gapping: Three Trading Tidbits

If you want a few bones from my Encyclopedia of candlestick charts book, here are three to chew on. The pages refer to the book where the tips appear.

  1. Two black gapping candles that appear within a third of the yearly low perform best -- page 848.
  2. Select tall candles for the best performance -- page 848.
  3. For the best performance, trade the two black gapping candles when the primary trend is downward -- page 850.

Two Black Gapping: Example

The two black gapping candlestick on the daily scale

This chart shows the two black gapping candlestick pattern circled in red on the daily scale. Price trends upward at a sedate pace then forms a series of small black candles, mostly trending lower. The next day, an opening black marubozu candlestick leads the way downward, gapping below the prior black candle. The following day, another black candle appears but this one has a lower high, just as it is required to have for a two black gapping candlestick. Price doesn't really pause on the way down from there, either.

Notice the price scale. The stock dropped from a peak of 13 to a low of 6 and change in a matter of weeks. Ouch.

The breakout from this candle is downward when price closes below the lowest low in the pattern. Since price trends downward into the two black gapping candlesticks and exits downward, the candle patterns acts as a continuation of the downward price trend.

-- Thomas Bulkowski

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See Also

 

Support this site! Clicking any of the books (below) takes you to Amazon.com. If you buy ANYTHING while there, they pay for the referral.

My novels:  Bumper's Story Head's Law

Chart Patterns: After the Buy Getting Started in Chart Patterns, Second Edition Trading Basics Fundamental Analysis and Position Trading Swing and Day Trading Visual Guide to Chart Patterns Encyclopedia of Candlestick Charts Encyclopedia of Chart Patterns 2nd Edition Trading Classic Chart Patterns

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