Skip to content

CDL_GAPSIDESIDEWHITE (Up/Down-Gap Side-by-Side White Lines)

Overview

The Up/Down-Gap Side-by-Side White Lines pattern is a rare three-candle continuation pattern that appears during strong trends. It consists of a gap followed by two consecutive white (bullish) candles with similar bodies, suggesting the current trend will continue despite a brief pause. This pattern signals that buyers or sellers remain in control after a gap, providing confirmation to hold existing positions.

Parameters

Parameter Type Default Description
open Array Required Array of opening prices for each period
high Array Required Array of high prices for each period
low Array Required Array of low prices for each period
close Array Required Array of closing prices for each period

Parameter Details

Note: Array elements should be ordered from oldest to newest (chronological order)

open - Array of opening prices for the analyzed time series - Must have the same length as high, low, and close arrays - Used to identify gap formation and candle body direction

high - Array of high prices for each period - Critical for determining candle real body size - Used to verify pattern structure

low - Array of low prices for each period - Helps identify gap presence and size - Used to validate pattern formation

close - Array of closing prices for each period - Used to determine candle color and body size - Essential for identifying white (bullish) candle formation

Usage

Basic Usage

require 'sqa/tai'

# Example price data showing the pattern
open =  [50.00, 52.00, 52.50, 52.40]
high =  [50.50, 52.80, 53.00, 52.90]
low =   [49.80, 51.90, 52.30, 52.20]
close = [50.20, 52.60, 52.80, 52.70]

pattern = SQA::TAI.cdl_gapsidesidewhite(open, high, low, close)

puts "Pattern signal: #{pattern.last}"
# 0 = no pattern, +100 = bullish continuation, -100 = bearish continuation

Analyzing Pattern Signals

# Check for pattern occurrence over time
pattern.each_with_index do |signal, idx|
  next if signal == 0

  if signal == 100
    puts "Bullish continuation at index #{idx} - uptrend likely to continue"
  elsif signal == -100
    puts "Bearish continuation at index #{idx} - downtrend likely to continue"
  end
end

Combining with Trend Confirmation

# Use with moving average for trend confirmation
require 'sqa/tai'

# Calculate pattern and trend
pattern = SQA::TAI.cdl_gapsidesidewhite(open, high, low, close)
ma20 = SQA::TAI.sma(close, 20)

current_signal = pattern.last
current_price = close.last
current_ma = ma20.last

if current_signal == 100 && current_price > current_ma
  puts "Strong bullish continuation signal confirmed by uptrend"
elsif current_signal == -100 && current_price < current_ma
  puts "Strong bearish continuation signal confirmed by downtrend"
end

Understanding the Indicator

What It Measures

The Up/Down-Gap Side-by-Side White Lines pattern measures the strength of trend continuation after a gap. When a gap occurs followed by two consecutive white candles with similar bodies, it suggests: - Strong buying pressure maintaining the trend - Confidence among market participants - Reduced likelihood of reversal despite the gap - Potential for continued movement in the gap direction

This pattern is particularly valuable because gaps typically indicate strong momentum, and the formation of two side-by-side white candles after a gap confirms that the momentum is sustained.

Pattern Structure

Upside Gap Side-by-Side White Lines (Bullish Continuation): 1. First candle: A white candle in an uptrend 2. Second candle: A white candle that gaps up from the first candle 3. Third candle: Another white candle with a body similar to the second candle, opening near the second candle's open

Downside Gap Side-by-Side White Lines (Bearish Continuation): 1. First candle: A black candle in a downtrend 2. Second candle: A white candle that gaps down from the first candle 3. Third candle: Another white candle with a body similar to the second candle, opening near the second candle's open

The key characteristic is that despite the two white candles appearing after a gap, the pattern still suggests continuation of the original trend.

Indicator Characteristics

  • Range: Returns -100 (bearish continuation), 0 (no pattern), or +100 (bullish continuation)
  • Type: Continuation pattern (three-candle formation)
  • Frequency: Rare pattern
  • Best Used: During strong trending markets with clear directional momentum
  • Reliability: Moderate to high when confirmed with volume and trend indicators

Interpretation

Signal Values

  • +100: Bullish continuation pattern detected - uptrend expected to continue
  • 0: No pattern present at this position
  • -100: Bearish continuation pattern detected - downtrend expected to continue

Pattern Recognition

Bullish Continuation Signal (+100): - Appears during an established uptrend - Gap up occurs, followed by two consecutive white candles - Second and third candles have similar body sizes - Suggests buyers remain in control and will push prices higher

Bearish Continuation Signal (-100): - Appears during an established downtrend - Gap down occurs, followed by two consecutive white candles - Despite white candles, the gap direction suggests continued downward pressure - Indicates a brief consolidation before resuming the downtrend

Market Psychology

The pattern reveals important market psychology: - The gap demonstrates strong initial momentum - The two white candles show buying interest but at a stable level - The similarity of the two white candles suggests equilibrium at the new level - The trend is likely to continue after this brief consolidation

Trading Signals

Buy Signals

For the bullish continuation pattern (+100):

  1. Entry Point: Enter long when the pattern completes (after the third candle closes)
  2. Confirmation: Verify the pattern occurs in an established uptrend
  3. Volume: Look for sustained or increasing volume during pattern formation

Example Scenario: 

# Detect bullish continuation
if pattern.last == 100 && volume.last > volume[-2..-1].sum / 2
  entry_price = close.last
  stop_loss = low[-3..-1].min - (0.02 * low[-3..-1].min)
  target = entry_price + 2 * (entry_price - stop_loss)

  puts "Buy Signal: Enter at #{entry_price}"
  puts "Stop Loss: #{stop_loss}"
  puts "Target: #{target}"
end

Sell Signals

For the bearish continuation pattern (-100):

  1. Entry Point: Consider closing long positions or entering short when pattern completes
  2. Confirmation: Verify the pattern occurs in an established downtrend
  3. Stop Loss: Place stop above the highest point of the three-candle pattern

Example Scenario: 

# Detect bearish continuation
if pattern.last == -100 && close.last < sma_50.last
  entry_price = close.last
  stop_loss = high[-3..-1].max + (0.02 * high[-3..-1].max)
  target = entry_price - 2 * (stop_loss - entry_price)

  puts "Sell Signal: Enter short at #{entry_price}"
  puts "Stop Loss: #{stop_loss}"
  puts "Target: #{target}"
end

Position Management

Holding Existing Positions: - If already long and +100 appears: Hold position, trend continuation expected - If already short and -100 appears: Hold position, downtrend continuation expected - Pattern serves as confirmation to maintain current positions

Best Practices

Optimal Use Cases

This pattern works best in: - Strong trending markets: Clear directional movement required - Medium to high volatility: Gaps are more meaningful - Liquid markets: Better price discovery and gap reliability - Continuation phase: After initial trend establishment, not at trend start - Time frames: Works across timeframes but most reliable on daily and 4-hour charts

Combining with Other Indicators

With Trend Indicators: - Moving Averages: Confirm trend direction; pattern should align with MA slope - ADX: Verify trend strength; ADX above 25 confirms strong trend - MACD: Look for continued separation of MACD lines in trend direction

With Volume Indicators: - Volume Analysis: Increasing volume strengthens continuation signal - On-Balance Volume (OBV): Should confirm trend direction - Volume Profile: Look for acceptance at new price levels after gap

With Support/Resistance: - Verify pattern doesn't occur near major resistance (bullish) or support (bearish) - Pattern is more reliable when room exists for continued trend movement

Common Pitfalls

  1. Ignoring Trend Context: Pattern requires an established trend; avoid using in ranging markets
  2. Misidentifying White Candles: Ensure both second and third candles are genuinely white (close > open)
  3. Overlooking Gap Size: Small gaps may not provide sufficient continuation momentum
  4. False Gaps: In 24-hour markets, weekend gaps may be less reliable
  5. Over-trading: Pattern is rare; don't force pattern recognition in unclear formations

Risk Management Guidelines

Stop Loss Placement: - Bullish Pattern: Below the low of the three-candle formation - Bearish Pattern: Above the high of the three-candle formation - Buffer: Add 1-2% buffer for volatility

Position Sizing: - Use smaller position sizes due to moderate pattern reliability - Consider scaling in after initial confirmation - Never risk more than 2% of capital on a single trade

Practical Example

Complete trading scenario:

require 'sqa/tai'

# Historical data showing strong uptrend
open =  [45.00, 46.00, 47.50, 49.00, 51.00, 51.50, 51.40]
high =  [46.20, 47.80, 49.30, 50.80, 52.00, 52.10, 51.90]
low =   [44.80, 45.90, 47.30, 48.80, 50.80, 51.20, 51.10]
close = [46.00, 47.50, 49.00, 50.50, 51.80, 51.70, 51.60]

# Calculate pattern
pattern = SQA::TAI.cdl_gapsidesidewhite(open, high, low, close)

# Calculate supporting indicators
sma_20 = SQA::TAI.sma(close, 5)  # Using 5 for short data
adx = SQA::TAI.adx(high, low, close, 5)

# Analysis
current_signal = pattern.last
current_price = close.last
trend_confirmed = current_price > sma_20.last

if current_signal == 100 && trend_confirmed
  puts "=" * 50
  puts "BULLISH CONTINUATION PATTERN DETECTED"
  puts "=" * 50
  puts "Current Price: $#{current_price}"
  puts "Pattern Signal: #{current_signal}"
  puts "Above 20 SMA: #{trend_confirmed}"
  puts ""

  # Calculate trade parameters
  pattern_low = low[-3..-1].min
  stop_loss = pattern_low * 0.98
  risk = current_price - stop_loss
  target = current_price + (2 * risk)

  puts "TRADE SETUP:"
  puts "Entry: $#{current_price.round(2)}"
  puts "Stop Loss: $#{stop_loss.round(2)}"
  puts "Target: $#{target.round(2)}"
  puts "Risk/Reward: 1:2"
  puts "Risk Amount: $#{risk.round(2)} per share"

elsif current_signal == -100
  puts "Bearish continuation detected - consider exiting longs"
else
  puts "No pattern detected at current position"
end

Similar Patterns

Complementary Patterns

  • Doji: Helps identify when continuation may pause
  • Engulfing: Can signal reversal if continuation fails
  • Dark Cloud Cover: Potential reversal signal to watch for

Indicator Combinations

Advanced Topics

Multi-Timeframe Analysis

For stronger confirmation: 1. Identify pattern on primary timeframe (e.g., daily) 2. Confirm trend direction on higher timeframe (e.g., weekly) 3. Use lower timeframe (e.g., 4-hour) for precise entry timing 4. All timeframes should show aligned trend direction

Pattern Variations

  • Large Gap: Gaps larger than 2% are more significant
  • Equal Bodies: More symmetrical second and third candles increase reliability
  • Volume Pattern: Decreasing volume on the two white candles can indicate consolidation before continuation

Market Context Considerations

  • Gap Fill Risk: Monitor for gap-filling behavior which would invalidate the pattern
  • News Events: Verify gap isn't solely due to temporary news
  • Market Hours: In 24-hour markets, verify gap represents genuine demand shift

References

  • "Japanese Candlestick Charting Techniques" by Steve Nison
  • "Encyclopedia of Candlestick Charts" by Thomas Bulkowski
  • "Beyond Candlesticks" by Steve Nison
  • Technical Analysis of Financial Markets by John J. Murphy

See Also