Tonight I want to discuss “Gap Fills” I was asked the other day what I meant, so I decided to do this thread.
Gaps are areas on a chart where the price of a stock or another financial instrument moves sharply up or down, with little or no trading in between. As a result, the asset's chart shows a gap in the normal price pattern.
Gaps are spaces on a chart that emerge when the price of the financial instrument significantly changes with little or no trading in-between.
Gaps occur unexpectedly as the perceived value of the investment changes, due to underlying fundamental or technical factors.
Gaps occur because of underlying fundamental or technical factors. For example, if a company's earnings are much higher than expected, the company's stock may gap up the next day. This means the stock price opened higher than it closed the day before
How do you play gaps? Some traders will buy when fundamental or technical factors favor a gap on the next trading day. For example, they'll buy a stock after hours when a positive earnings report is released, hoping for a gap up on the following trading day.
Traders might also buy or sell into highly liquid or illiquid positions at the beginning of a price movement, hoping for a good fill and a continued trend.
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