The Rising and Falling Window strategy, rooted in traditional Japanese candlestick analysis, is a powerful price action technique that focuses on market gaps. These gaps—referred to as “windows” in Japanese trading terminology—highlight sharp changes in sentiment and momentum. When traded correctly, these windows can act as dynamic support or resistance zones and offer high-probability breakout or continuation trades.

This article explains how to identify Rising and Falling Windows, how to trade them with confirmation, and how to integrate them into your trading plan for precision entries and strong risk-reward setups.

What Is a Rising or Falling Window?

• Rising Window:
  • A bullish gap where the low of the second candle is above the high of the previous candle
  • Indicates strong bullish sentiment and potential for continuation
  • Acts as a support zone in future price action
• Falling Window:
  • A bearish gap where the high of the second candle is below the low of the previous candle
  • Indicates strong bearish momentum and potential for continuation
  • Acts as a resistance zone

Note: In forex, which trades 24 hours, these gaps are more common on daily or weekly charts or during high-impact news releases that cause price to jump from one level to another without trading in between.

Why Rising and Falling Windows Matter

Windows (gaps) signal a sudden shift in market sentiment, often due to institutional order flow or impactful news. They:

• Confirm trend continuation when respected
• Act as zones of imbalance, where one side (buyers or sellers) dominates
• Provide clear invalidation levels for setting stop-losses

Used properly, these windows offer low-risk entries with defined structures and strong momentum support.

How to Trade the Rising & Falling Window Stratege

A structured process improves the reliability of this setup. Here’s how to do it:

1. Spot a Valid Rising or Falling Window

Rising Window Setup:

• Appears during or after an uptrend
• Candle 2 opens above the previous candle’s high
• No overlap between the two candle bodies

Falling Window Setup:

• Appears during or after a downtrend
• Candle 2 opens below the previous candle’s low
• Strong bearish signal when accompanied by volume

Pro Tip: Mark the window zone as a support/resistance area. If price revisits this area later, watch for rejection.

2. Wait for Retest or Continuation

There are two main ways to trade these gaps:

A. Retest Entry:

• Wait for price to retrace into the window zone
• Enter on a bullish (Rising Window) or bearish (Falling Window) rejection candle (e.g. pin bar, engulfing)

B. Breakout Continuation:

• Enter immediately after the gap candle, especially if it’s large and confirmed by volume or macro catalyst
• Add on pullbacks if the trend strengthens

3. Confirm with Price Action or Indicators

Before entering, ensure confirmation with:

• Candlestick patterns: Pin bars, engulfing candles, inside bars
• Trendlines or EMAs: Use 20 or 50 EMA to confirm trend direction
• RSI/MACD: Avoid overbought/oversold unless it’s a reversal from the gap
• Volume spike: Validates the strength of the gap breakout

4. Set Stop-Loss and Take-Profit

Stop-Loss:

• For Rising Window: Below the bottom of the gap zone
• For Falling Window: Above the top of the gap zone

Take-Profit:

• Previous highs/lows
• Key structure levels or Fibonacci extensions
• Risk-to-reward ratio of 2:1 or greater

5. Apply in the Right Market Conditions

Best Timeframes:

• Daily, 4H, Weekly (cleaner gaps and structure)

Markets:

• Forex (especially post-news gaps)
• Stocks and indices (gaps common at open)
• Crypto (weekend gaps)
• Commodities (e.g. oil after inventory data)

Strategy Summary Table

Pattern	Trend	Signal	Support/Resistance Role	Entry Type	Stop-Loss
Rising Window	Uptrend	Bullish gap	Future support zone	Breakout or retest	Below window low
Falling Window	Downtrend	Bearish gap	Future resistance zone	Breakout or retest	Above window high

Conclusion: Trading the Rising & Falling Window with Precision

The Rising and Falling Window strategy gives traders a powerful edge by leveraging gaps as momentum signals and structural levels. These windows offer high-probability setups when aligned with trend, price action, and confirmation tools. Whether you prefer breakout trades or retest entries, these gap zones provide well-defined opportunities for disciplined trading.

To master gap strategies like this and integrate them into a complete technical system, check out our Trading Courses at Traders MBA, where you’ll learn institutional-grade price action skills that work across all markets.