Pattern Detail

Bearish Three Gap Ups

Four-candle exhaustion pattern: three gaps higher in a row, a run-up so steep it often marks where buyers give out.

A real Bearish Three Gap Ups on NQ daily bars, Aug 15, 2011. Price then followed through 7.6% over the next 5 bars. The bright candles are the pattern; the dimmed bars are surrounding context.
A real Bearish Three Gap Ups on NQ daily bars, Aug 15, 2011. Price then followed through 7.6% over the next 5 bars. The bright candles are the pattern; the dimmed bars are surrounding context.

Shown only on the markets where this pattern occurs.

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How to read this

Everything here is in R, the setup's own risk. 1R is the distance from the entry (the pattern's closing price) to where it would be proven wrong — its highest high over the 4 bars that form it. So "offered 2R" means price ran twice that distance in your favor at some point before the stop. It does not assume you took profit there: a target is a strategy choice.

Room offered (≥ 1R)

28.0%

Too few to trust

Offered at least 1× its risk before the stop, vs 41.2% for a random short entry (-13.2 pts).

Move size vs normal

2.72×

Realized range over the next 20 bars vs a random bar. Precedes a bigger move.

Typical room (20-bar)

0.73R

Average run in favor (capped at 3R), vs 1.08R for a random short entry.

Summary

Offered ≥1R 28.0% of the time vs 41.2% for a random short entry. The 13.2-point gap is no bigger than the ±19.3-point margin of error you would get by chance from 25 occurrences. Not a reliable edge.

Room offered, this setup vs a random short entry

Only 25 occurrences. The breakdown below is shown in full, but a sample this small is anecdotal, a hint, not a measured edge. That is usually a limit of available history, not a flaw in the pattern. For a firmer read, try a lower timeframe or a more active instrument.

Outcome This setup Random entry Edge
Offered ≥ 1R 28.0% 41.2% -13.2
Offered ≥ 2R 24.0% 26.1% -2.1
Offered ≥ 3R 16.0% 17.9% -1.9
Stopped < 1R 72.0% 54.6% +17.4
Went sideways 0.0% 4.3% -4.3

25 occurrences · 357,262 random-entry controls · 20-bar horizon

A three gap ups is a run that climbs too fast to last. The market gaps higher, then gaps higher again, then gaps higher a third time, with up candles riding each leap. Three gaps in a row is a sprint, and sprints end. By the third gap, buyers are stretched thin, and this exhausted run-up often marks where the move tops out.

How to spot it

  • Price is leaping higher, gapping up between bars.
  • The second candle gaps up above the first.
  • The third candle is an up (green) candle that gaps up above the second.
  • The fourth candle is another up candle that gaps up above the third.
  • Three gaps higher in a row, a steep run that usually cannot hold.

The dashed box on the chart above marks the four candles on a real occurrence, with the advance before and the move after.

The psychology

Each gap higher is buyers paying up. Rather than waiting for sellers to meet them, they jump the price to a new level at the open and do it again, and then a third time. On the surface this looks like total control, demand so eager it will not pause to haggle.

That eagerness is also the weakness. Buyers willing to chase price up through three gaps in a row are the ones already committed, which means the pool of fresh buyers left to keep paying up is thinning with every leap. A move this steep leans entirely on momentum, and momentum needs a constant supply of new money to feed it. By the third gap the run has outpaced what the crowd can sustain, and the first hint of hesitation leaves a lot of stretched buyers with nobody above them to sell to. Control has not flipped yet, but the side doing all the work is running short of fuel right where the chart looks strongest.

Whether that overstretched run actually rolls over is the question the data below takes up.

Does it actually work?

A pattern is a setup, not a trade, so the honest question is not “did it win” but “how much room did it tend to offer before it was proven wrong.” The tabs below answer that across five futures markets (Nasdaq, S&P 500, gold, crude oil, natural gas) and seven timeframes from one minute to one day.

For each occurrence we measure the room the move offered in units of the pattern’s own risk, then set it against what a random entry on the same market would have done. When the pattern offers more room more often than chance, that shows up as a real edge. When it does not, the page says so plainly.

Read it with the sample size in view. On the faster timeframes a pattern can fire thousands of times, enough to trust. On the daily chart it is far rarer, so treat those numbers as a hint rather than a verdict. Thin samples are flagged for you on the page.

How we measured it

  • Entry is the close of the final candle of the pattern.
  • One unit of risk, 1R, is the distance from that close up to the pattern’s invalidation point: the highest high of the 4 candles that form it. If price trades through there, the setup is wrong.
  • We then follow the next 20 bars and record how far price ran in your favor, in multiples of that risk, before the stop was hit.
  • Every figure is set against a random entry on the same market and timeframe, so the market’s own drift is accounted for.
  • No profit target and no position sizing. Where you take profit is a strategy choice; this measures only the room the pattern tends to give.

What this page does not cover

  • Volume on the pattern’s candles.
  • Whether the pattern forms at a meaningful resistance level.
  • Pairing it with a trend filter or a confirming signal.
  • A profit target or position sizing. We use the pattern’s own invalidation point as the stop to define risk, but where you take profit, and how much you put on, are strategy decisions this page leaves to you.

Sample Bearish Three Gap Ups Firings (20)

Based on data through Apr 29, 2026

Time Risk (pts) Room offered Result
Mar 12, 2020, 1:43 PM CDT 22.25 0.00R Stopped
Mar 31, 2009, 8:30 AM CDT 1 0.00R Stopped
Mar 30, 2009, 2:55 PM CDT 0.75 0.00R Stopped
Mar 25, 2009, 8:55 AM CDT 0.75 0.00R Stopped
Mar 11, 2009, 12:35 PM CDT 0.5 0.00R Stopped
Feb 27, 2009, 8:55 AM CST 3.75 0.00R Stopped
Feb 24, 2009, 2:15 PM CST Open
Feb 24, 2009, 2:10 PM CST 0.75 0.00R Stopped
Feb 24, 2009, 10:40 AM CST 2.5 3.00R Ran ≥1R
Feb 13, 2009, 12:20 PM CST 1.25 0.00R Stopped
Jan 9, 2009, 12:45 PM CST 0.25 0.00R Stopped
Jan 9, 2009, 12:40 PM CST 2 0.00R Stopped
Jan 2, 2009, 8:35 AM CST 2.75 0.00R Stopped
Dec 23, 2008, 10:40 AM CST 0.5 3.00R Ran ≥1R
Dec 22, 2008, 2:40 PM CST 3.75 0.40R Stopped
Dec 22, 2008, 2:35 PM CST 1.5 0.00R Stopped
Dec 15, 2008, 2:45 PM CST 4.5 2.00R Ran ≥1R
Dec 11, 2008, 11:55 AM CST 1.5 3.00R Ran ≥1R
Dec 8, 2008, 8:40 AM CST 0.75 3.00R Ran ≥1R
Dec 3, 2008, 9:25 AM CST Open

Sample backtests (2)

Real backtested runs of this pattern, with commissions and slippage. Open one for the full equity curve and metrics, or backtest it yourself on your own contract and dates.

Backtest this pattern

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