Sometimes we forget there are always those new to TA who read here.

Question from a member

Fully, Can you help me understand the significance of “gaps” and why one should expect them to close as Rambus mentioned in his last commentary. Thanks, XXX

……………………………………………………
OK

There are few things more frustrating in Chartology than the dreaded… “Gaps”.
And few thing as sure… as “ALL GAPS MUST FILL”

For Example They happen on a daily chart when the price opens Above( bull gap) yesterday’s high ….and stays above all day.
Or Below yesterday’s Low ( Bear Gap) and stay below all day

So if you look at a candlestick or bar chart …you can spot them…there is a space …small or large… in the pattern

For some strange reason almost ALL gaps fill at some point.
Which means sooner or later the price will return to the gap price and trade within the gap before resuming the trend….or NOT

If you are long gold and it takes off after a gap and doesn’t close it…then odds are your going for a ride up and down
BUT the sooner the gap fills and then hopefully the price resumes up…the safer you feel staying long

Some gaps take YEARS to fill and are no consequence to short term traders
Gaps on the daily are common but weekly not so much

There is still an open Gap on the HUI chart from the big hard drop in 2013….that’s rare but we can be confident at some time it will fill.

There are a rare few gaps ….we call the breakaway gaps that don’t fill for a long time if ever…..just to keep us guessing.

One more point. Gaps OFTEN happen when a pattern ( usually a big pattern ) finally breaks out one way or the other

It gaps the trend line ….so if it Gaps up…those waiting for the breakout have to chase …unless they are patient and brave enough to wait for the gap close / backtest…Tricky Stuff eh ?

Hope this helps
Good trading
Fully

——————————————————————————–

From: Lee Salisbury
Sent: January 25, 2018 4:07 PM
To: Gary Fullgold Crown
Subject: Gaps ????

Gary, Can you help me understand the significance of “gaps” and why one should expect them to close as Rambus mentioned in his last commentary. Thanks, Lee