In an uptrend, an upward-gapping white candlestick followed the next session by another similar sized white candlestick with about the same opening is a bullish continuation pattern. This two candlestick pattern is referred to as up-gap side-by-side white lines (see Exhibit 7.22). If the market closes above the higher of the side-by-side white candlesticks, another leg up should unfold.
The side-by-side white candlesticks described previously are rare. Even more rare are side-by-side white lines which gap lower. These are called down-gap side-by-side white lines (see Exhibit 7.23). In a downtrend, the side-by-side white lines are also a continuation pattern. That is, prices should continue lower. The reason this pattern is not bullish (as is the up-gap variety) is because in a falling market, these white lines are viewed as short covering. Once this short covering evaporates, prices should move lower. The reason that the down-gap side-by-side white line pattern is especially rare is because black candlesticks, not white candlesticks, are more natural in a market that lowers gaps. If in a falling market a black candlestick gaps lower and is followed by another black candlestick with a lower close, the market should experience another price decline.
Exhibit 7.24 shows a down-gap side-by-side white line pattern in early March. The theory behind this pattern during a downtrend is that it is short covering. Thus it offers only a temporary respite from a falling market. That is what we saw here as the market resumed its drop after a period of consolidation. This is not an ideal down-gap side-by-side white line pattern since the opens on the white candlesticks were not identical and the white lines were separated by one day. Nonetheless, this is likened to the down-gap side-by-side white line pattern.
In addition, Exhibit 7.24 shows two up-gap side-by-side white line patterns. This pattern portends bullish implications if it emerges at lower price levels. The first up-gap side-by-side white line pattern had three opens at about the same price. Then the market staged a brief pullback on May 8 which marginally broke under the window but sprang right back from there. The second up-gap side-by-side white line pattern gave another bullish signal. As should be the case with the up-gap side-by-side white lines, they provided a firm footing.