• The up/down gap side-by-side white lines is a three-candle candlestick continuation pattern. The up (bullish) version is: a large up candle, a gap up, then two similar-sized up candles side‑by‑side. The down (bearish) version is the mirror image.
– The pattern is uncommon but moderately reliable as a continuation signal. Thomas Bulkowski’s research (cited by Investopedia) finds continuation about 66% of the time; bigger average moves (≈6% in 10 trading days) were observed mainly when the pattern appeared in downtrends with a downside breakout.
– Traders usually wait for confirmation (a breakout beyond the pattern high/low) and apply disciplined stops and position sizing. Use other technical tools (trend, volume, support/resistance, moving averages) to improve odds.
What the pattern is
– Structure (bullish “up gap side-by-side white lines”):
1. A large bullish candle (white/green) in the direction of the prevailing trend.
2. A gap in the same direction (price opens above the prior candle’s close).
3. Two subsequent bullish candles of similar size that occur side‑by‑side (their bodies are about the same size).
– Bearish (down) version is the same idea flipped: a large down candle, gap down, then two similar down candles (or the pattern can appear as two smaller same-colored candles following the gap).
– Interpretation: the pattern signals that the prevailing move (up or down) is likely to continue rather than reverse.
Psychology behind the pattern
– The first large candle shows strong directional conviction by traders.
– The gap demonstratesenthusiasm (or panic in downtrends) at the open.
– The two similar “side-by-side” candles imply consolidation or distribution while maintaining the bias—the market pauses but buyers (for up version) or sellers (for down version) remain in control, increasing the probability of continuation.
How to identify the pattern — checklist
1. Confirm the prevailing short-to-medium term trend (uptrend for bullish version, downtrend for bearish).
2. Spot a large directional candle aligned with the trend.
3. Look for a same-direction gap at the next open.
4. Verify two subsequent candles of the same color (direction) with similar body sizes that sit next to each other (side-by-side).
5. Check volume: ideally the initial candle and gap should show relatively strong volume. The two side-by-side candles may show moderate volume; increasing volume on a follow‑through breakout is a stronger confirmation.
6. Prefer daily charts for “classic” use; pattern can appear on other timeframes but will be rarer and may be noisier.
Practical trading steps (entry, stop, target)
These are example rules you can adapt and backtest for your strategy.
Entry (bullish up-gap version)
– Conservative: wait for price to close above the high of the two side‑by‑side candles (confirmation). Enter on that breakout close or on a small pullback to that breakout area.
– Aggressive: enter on the close of the third candle (the second side‑by‑side candle) if you accept higher false-signal risk.
Entry (bearish down-gap version)
– Conservative: enter on a close below the low of the two side‑by‑side candles (confirmation).
– Aggressive: enter on the close of the third candle.
Stop-loss placement
– Tight: below the low of the second or third candle (whichever provides a sensible buffer).
– Wider: below the low of the first large candle (gives more room if you expect volatility).
– Use Average True Range (ATR) to set a volatility‑based stop if desired (e.g., 1.5–2× ATR below entry).
Profit targets / exit rules
– Fixed target: use a risk:reward ratio (e.g., 1:2 or 1:3).
– Measured move: project distance similar to prior swing or measured from the first candle’s body.
– Trailing exit: use a moving average, trailing ATR stop, or close trailing stop to let trends run.
– Partial exits: take a portion of the position off at the first target and trail the remainder.
Position sizing and risk management
– Risk no more than a small percentage of account equity per trade (commonly 1–2%).
– Adjust position size based on stop distance so absolute dollar risk stays within your limit.
– Avoid over‑leveraging; this pattern is not infallible.
Confirmation and filters to raise odds
– Volume: stronger if the initial candle and/or breakout have above‑average volume.
– Trend confirmation: pattern is more reliable when it forms in the direction of a clear trend (e.g., price above a rising 50‑day MA for bullish setups).
– Support/resistance: if the breakout clears an area of resistance/support, the signal is stronger.
– Momentum indicators: RSI, MACD or ADX can corroborate trend continuation rather than reversal.
– Timeframe alignment: check higher and lower timeframes for agreement.
Example (Apple — as described in Investopedia)
– Coming off a swing low, AAPL printed a large bullish candle, then gapped higher, then produced two similar-sized bullish candles (side-by-side). The next day the price moved above the highs of those two candles, providing confirmation ofrally; the rallya few days before drifting sideways. (Source: Investopedia example.)
Limitations and pitfalls
– Rarity: the pattern is somewhat uncommon, so expect fewer opportunities.
– False signals: like all patterns, it can fail. Bulkowski’s work (cited by Investopedia) finds continuation ≈66% of the time, so one in three instances may reverse or fail.
– Magnitude: many occurrences don’t lead to large moves. Only certain contexts (Bulkowski noted downtrend examples with downside breakouts) tended to produce larger average moves (~6% in 10 trading days).
– Over-reliance: don’t use this pattern in isolation. Combine with broader market context, volume, trend and risk controls.
– Timeframe sensitivity: intraday noise can create misleading “patterns” on lower timeframes.
Comparison to similar candlestick patterns
– Three Outside Up/Down: Different — the three outside patterns are reversal signals (e.g., a bearish candle followed by two bullish candles that engulf the prior candle is a reversal), while side-by-side white lines is a continuation pattern.
– Other continuation patterns (e.g., rising three methods) differ in structure and context—be sure you are identifying the exact pattern before trading.
Practical workflow for traders (step-by-step)
1. Screen for trend-following candidates (e.g., stocks above 50‑day MA for bullish setups).
2. Scan daily charts for the up/down gap side-by-side white lines formation.
3. Check volume and nearby support/resistance.
4. Determine entry rule (conservative breakout close above/below the two candles).
5. Calculate stop-loss and position size consistent with risk limits.
6. Set profit targets and trailing exit rules.
7. Enter trade only when confirmation conditions are met.
8. Monitor trade, adjust stops to breakeven when appropriate, and exit according to plan.
9. Log the trade and outcome for ongoing backtesting and improvement.
Backtesting and practice
– Because the pattern is uncommon, backtest over several years and multiple securities to get meaningful sample size.
– Paper trade or use a small position size while you validate the rules in live markets.
– Track metrics: win rate, average gain/loss, max drawdown, expectancy, and how pattern performance changes with market regime.
Sources and further reading
– Investopedia: “Up/Down Gap Side-by-Side White Lines” (source URL you provided) — explains pattern structure, psychology, examples, and notes Bulkowski’s statistics.
• Thomas Bulkowski’s candlestick research (as summarized by Investopedia) for historic pattern performance statistics — see his published works and database for detailed pattern performance studies.
Bottom line
The up/down gap side-by-side white lines is a clear, rule‑based continuation pattern that can provide high‑odds setups when it appears in the direction of a prevailing trend and is confirmed by volume and a breakout. Because it is uncommon and not perfect, the best results come from waiting for confirmation, using disciplined stops, combining pattern signals with other technical filters, and thorough backtesting.