Falling Window Candlestick Pattern on Live Gold

What it shows

Each one gets a red label marked FW over the high of the second candle.

How Pravex works it out

1. The pattern is two candles of any colour and size. The first must have a range above zero.
2. The second candle’s high must be below the first candle’s low. Shadows count, so this is a full gap with nothing in common between the two candles.
3. The downtrend the falling window needs is read from the first candle: by default its close must sit below the 50-candle simple average, and the trend setting can make the falling window test stricter or switch it off.
4. Example numbers, not a live price: the first candle has a low of 2,000 and the second a high of 1,997. The window runs from 1,997 to 2,000.

Settings

Setting	Default	What changing it does
Trend check	SMA50	Decides what counts as a downtrend before the falling window. By default one close is read against the 50-candle average; adding the 200-candle average asks for a longer trend before the falling window, and switching the check off ignores the trend completely.
Label colour	Red (#F23645)	Colours the FW label that sits over the high of the candle completing the falling window, with the FW letters always in white.

How traders read it

The empty space is the point. Sellers were so far ahead that the market jumped past a whole band of prices. If price climbs back into that band later, it is the first place sellers are expected to return, so the window acts as resistance. A close above the top of the window, the first candle’s low, closes it and cancels the reading.

It is a continuation pattern: it says the fall has force, not that it ends. One way to trade it is to sell a rally into the window, with a stop above it.

When it misleads

Spot gold trades almost around the clock, so windows are rare on hourly candles and most of them sit where trading resumes after a pause, such as the weekly open. Those gaps often reflect news that came out while the market was shut, and plenty of them get filled later. For the falling window, one close under the 50-candle average counts as a downtrend. On the newest candle the falling window check reruns with every price change, so a label there can come and go until the candle closes.

Questions and answers

What is a falling window in candlesticks?

A gap down in a fall: the second candle’s high is below the first candle’s low.

Is a falling window bearish?

Yes. It is read as the fall continuing, with the gap acting as resistance on any rally back up.

What happens when a window is filled?

If price closes back above the first candle’s low, the gap is closed and the pattern no longer holds.

Related: Rising Window - Bullish, Downside Tasuki Gap - Bearish, Kicking - Bearish, All Candlestick Patterns, every indicator.