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{{Unreferenced|date=May 2024}}
{{Short description|Price chart analysis concept}}
[[File:Allgaps new.jpg|right|thumb|290px|Sequence of Gaps]]
A '''gap''' is defined as an unfilled space or interval. On a [[technical analysis]] chart, a gap represents an area where no trading takes place. On the Japanese candlestick chart, a window is interpreted as a gap. Gaps are spaces on a chart that emerge when the price of the financial instrument significantly changes with little or no trading in between.
In an upward [[Market trend|trend]], a gap is produced when the highest [[price]] of one day is lower than the lowest price of the following day. Conversely, in a downward trend, a gap occurs when the lowest price of any one day is higher than the highest price of the next day.
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==Trading gaps for profit==
Some market speculators "Fade" the gap on the opening of a market. This means for example that if the [[S&P 500]] closed the day before at 1150 (16:15 EST) and opens today at 1160 (09:30 EST), they will short the market expecting this "upgap" to close. A "downgap" would mean today opens at, for example, 1140, and the [[speculator]] buys the market at the open expecting the "downgap to close". The probability of this happening on any given day is
==Examples==
{{gallery
|width=250
|File:measuringgap new.jpg|
|File:exhaustiongap new.jpg|
|File:commongap new.jpg|
|File:breakawaygap new.jpg|
}}
==References==
{{reflist}}
{{technical analysis}}
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