This tells us the gap down was an overreaction as buyers jumped all over the cheaper prices.Īs stated earlier, a gap occurs when a stock’s opening price is different from the closing price. A gap down, on the other hand, indicates that the high of the current candlestick is lower compared to the low of the previous candlestick.īelow is a daily chart of Meta Platforms where the stock had a huge gap down after a terrible earnings report:Ī gap fill in stocks is significant because the market is saying that the gap in price does not reflect market sentiment.įor example, the market gapped down a lot when Russia invaded Ukraine, however it was immediately bought up when the market opened. However, they are more commonly witnessed on the daily chart since traders analyze the information obtained after the closing bell and tend to employ it at the beginning of the next trading session.Ī gap up indicates that the low of the current candlestick is higher compared to the high of the previous candlestick. Gaps can be found on a bar or candlestick chart in any timeframe. This phenomenon often occurs when there is frantic buying or panic-filled sell-offs in the market. Meaning of Gaps in Stock MarketĪ gap is an area on a chart where the price rises or falls swiftly without any trading activity in between. In this article, we’ll explain what gaps are, what types of gaps exist and the meaning of gap fill stocks. However, some traders have successfully made huge returns with gap-fill trading strategy. While the concept is surprisingly simple, successful execution can be challenging. One of the strategies they employ involves trading gap fill stocks or playing the gap. Traders who base their trading decisions on technical analysis utilize a wide list of strategies to decide when to buy or sell a stock. Technical analysis is the process of predicting future price movements based on historical price behavior within stock charts. Instead of analyzing the fundamentals, these traders rely on technical analysis to forecast future prices of stocks. In many cases, traders using fundamental analysis tools attempt to forecast whether and when the price of a stock will move up or down based on future growth prospects, and they make trading decisions accordingly.Įven though fundamental analysis tools to get a lot of media attention, many traders use another stock analysis to help them make wise decisions. Most day traders are familiar with the fundamental analysis tools commonly used in determining which stocks to trade.įundamental analysis is the practice of evaluating a number of factors, including a company’s balance sheet, management, strategic initiatives, consumer behavior, and microeconomic indicators, to determine whether a stock is priced correctly based on the intrinsic value of a company. A gap fill in stocks is when a stocks price moves in the aftermarket hours above or below the close of the previous day and then trades back through the gap.

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