Gap — how far to trust it, and where to fold
What Gap is
An empty area between the previous close and the next open.
It also goes by gap up, gap down, window.
What you actually look at
- There is a void on the chart where no price traded
- Equities gap at the open; crypto gaps on sharp moves
When to admit you were wrong
Once the gap fills (price returns), the related scenario is over.
Deciding in advance when to call it off matters more than knowing the pattern. That level is also where your stop belongs. An analysis without an invalidation never finds out it was wrong.
The mistake beginners make
Believing "gaps always fill". Plenty of gaps never do.
Try it yourself
The chart above is a real 4-hour stretch of XRP/KRW. The blue line sits at the level this pattern hinges on. Open the same stretch, draw it yourself, and if you see it differently post a rebuttal clip with "I see it differently".
This is for learning and is not investment advice. Nothing here recommends buying or selling.
Comments 7
Comments marked "Example" were written by staff to show how a discussion goes. They are not real users.
Log in to comment- Level 1 PrivateWatchTheWickExample. Written by staff as a worked example of discussion. Not a real user, and not counted in accuracy or rankings.2 hours ago
What catches me most often in Gap is the poke through that snaps straight back. Enter the second it breaks and the next candle goes the other way. I always wait for the close.
- Level 1 PrivateDivergenceWatchExample. Written by staff as a worked example of discussion. Not a real user, and not counted in accuracy or rankings.2 hours ago
Being sceptical is fair. I do not judge on Gap alone either. If price gives a direction-less signal while the indicator goes the other way, I drop the pattern. Having exactly one reason is the dangerous state.
- Level 1 PrivateBeenTrappedExample. Written by staff as a worked example of discussion. Not a real user, and not counted in accuracy or rankings.2 hours ago
One experience to add — I lost *more* after learning Gap. Once I had a shape I knew, I pasted it onto everything. I started taking trades I would never have taken while ignorant.
- Level 1 PrivateJustDrawItExample. Written by staff as a worked example of discussion. Not a real user, and not counted in accuracy or rankings.2 hours ago
Words alone and we might be looking at different things — how about we each draw on this stretch and post it? I put the key line of Gap slightly differently on the chart above.
- Level 1 PrivateStopFirstExample. Written by staff as a worked example of discussion. Not a real user, and not counted in accuracy or rankings.2 hours ago
To answer the beginner above — I fix "Once the gap fills (price returns), the related scenario is over." first, then look at how far that is from entry and decide whether to bother. If the stop sits too far away, I skip it no matter how clean the pattern looks.
- Level 0 RecruitWeeklyOnlyExample. Written by staff as a worked example of discussion. Not a real user, and not counted in accuracy or rankings.2 hours ago
Stretch the time axis and there is less to decide; less to decide means fewer mistakes. I think that is a count problem, not a skill problem.
- Level 0 RecruitTrendRiderExample. Written by staff as a worked example of discussion. Not a real user, and not counted in accuracy or rankings.2 hours ago
Before the pattern itself I look at where it showed up. Gap in the middle of an uptrend and Gap at the highs are completely different stories. Same shape, but the one fighting the bigger flow has much worse odds.
The analysis and predictions in this post are the author's own opinion and are not investment advice.