Bullish Downside Gap Two Rabbits

A downside gap two rabbits is a three-candle bottom that forms inside a fall. A down candle prints, then a small up candle gaps below it. A second up candle opens even lower but rallies past the first rabbit, closing back up near where the down candle ended without quite filling the gap. The two small up candles are the rabbits, hopping up from below. They show buyers stepping in after the gap and clawing price back toward the start.

How to spot it

• The market is falling into the pattern.
• The first candle is a down (red) candle that fits the decline.
• The second candle is a small up candle that gaps below the first.
• The third candle is another up candle that opens below the second but closes above it.
• The third candle’s close climbs back near the first candle’s close without going past it.

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

The psychology

The down candle keeps the fall going and leaves sellers comfortable. The first small up candle gaps below it, which still looks like weakness: price is lower, and a thin green bar down there reads like a feeble bounce that the trend will swallow. The second up candle then opens lower again, tempting the sellers to press once more.

That is where the story turns. Instead of breaking down, the second candle rallies past the first and closes back up near where the down candle ended. Buyers absorbed the lower open and clawed price all the way back toward the start of the move. The two small up candles, the rabbits, hop up out of the hole the gap created. They do not quite fill it, so this is not a finished victory for the buyers, but the lower open that should have rewarded sellers got bought instead, and that is the shift worth watching.

How often that recovery keeps going rather than fading is what the figures below address.

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 down to the pattern’s invalidation point: the lowest low of the three 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 support 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.