Gap (chart pattern)

On a technical analysis chart, a gap represents an area where no trading takes place.

Gaps are spaces on a chart that emerge when the price of the financial instrument significantly changes with little or no trading in between.

For example, the price of a share reaches a high of $30.00 on Wednesday, and opens at $31.20 on Thursday, falls down to $31.00 in the early hour, moves straight up again to $31.45, and no trading occurs in between $30.00 and $31.00 area.

Gaps can play an important role when spotted before the beginning of a move.

Once the probability of "gap fill" on any given day or technical position is established, then the best setups for this trade can be identified.