What is an opening gap?

A break in the series, not a fast move

A market closes at one price and opens at another. Between those two numbers, nothing traded, because nobody was there to trade. The chart draws an empty band, and that band is the only place on a price chart where the series is genuinely interrupted.

This is not the same thing as a market moving very fast. When price runs, every level in between prints, even if only once. The guide on fair value gaps is about that case: a range that traded from one side only. Here there is no trading at all to describe.

It is also the reason the range calculation in the guide on the ATR is called the true range: the word exists because the ordinary high minus low misses this jump entirely.

Why the empty band is not a level

The guide on support and resistance makes a level out of repetition: an area where the market stopped more than once. A gap cannot satisfy that rule, and not because nobody has tried. There were no trades inside it, so there is nothing to have stopped at.

What does exist is the pair of prices on either side. Yesterday's close and today's open are both real numbers that a great many people are watching, and they behave like any other obvious level. The band between them is empty, and drawing a zone across it invents a history that never happened.

A thin part of a volume profile is a different thing again. Thin means little traded. Empty means none.

What it does to the tools you already use

Most of what this site teaches assumes a continuous series. A gap quietly breaks several of those assumptions on the same morning.

• A break with nothing to retest. A level crossed by a gap was never traded through, so the retest that the guides on market structure and double tops rely on may simply not come.
• An average pulled by a price nobody paid. A moving average takes the close, and the close after a gap is on the far side of a band where nothing happened.
• Levels all on one side. The seven lines of a pivot point set are calculated from yesterday. Open far enough away and every one of them sits above the price, or every one below.
• A stop that was never a price. A stop inside the band does not fill inside the band. What it does instead is covered in the guide on order types.

What nobody can tell you about filling

When price comes back through a gap, traders say the gap fills. The idea is popular, and the evidence does not back it: a study of the Dow Jones, the S&P 500 and the Nasdaq from 1928 to 2018 (Plastun and colleagues, 2020) found no support for the belief that gaps usually fill, and on the day of the gap prices tended to keep moving in its direction.

There is no honest percentage here. Any figure depends entirely on how large a gap has to be before it counts, how long you are willing to wait, and which market you measured, and changing any of the three changes the answer. A gap that fills on the same morning and a gap that fills three years later are both counted as filled.

The useful version of the idea is smaller and it holds: the two edges are watched, so they can attract orders, and some traders work the band between them early in the session. That is a description of where attention is, not a prediction.

Where gaps happen, and where they do not

• Shares and indices. Constantly. The market is closed for most of the day and news does not wait for the opening bell. This is the ordinary case.
• Futures. Rarely, because most contracts trade nearly around the clock. What looks like a gap on a futures chart is often the weekend, or the join between two contracts.
• Spot forex. Only at the weekly reopen, and usually small. A currency pair that shows a large gap mid week is showing a data problem or a very thin market.
• Crypto. Almost never on spot, because the market never closes. The gaps people point at are usually on a futures product that does.

Which is why a habit that works on one screen fails on another, and why the market matters more here than in most of what this site covers.

Questions people ask

Do gaps always get filled?

No. The idea is popular, but a study of US stock indices from 1928 to 2018 did not support it, and there is no honest percentage attached to it: the number depends on how big a gap has to be to count and how long you are prepared to wait.

What is the difference between an opening gap and a fair value gap?

An opening gap is a break in the price series: the market was shut and nothing traded in the band. A fair value gap has no break at all. Every price in it traded, just from one side only.

Can you draw a level on a gap?

On the edges, yes. Yesterday's close and today's open are real prices that many people are watching. Across the band, no. A level is built from repetition, and nothing happened in there to repeat.

Do crypto and forex have gaps?

Rarely. Spot crypto never closes, so a gap on a crypto chart is usually on a futures product. Spot forex gaps at the weekly reopen and almost never during the week.

Reading the chart the morning after

Trading AI reads a photo or a screenshot of any chart and returns the market structure, the key levels and a full trade plan. A gap is visible in the image, so it is part of what the analysis reads.

The other kind of gap, and why it is not this one: What is a fair value gap?

Why the edges behave like any other watched price: What are support and resistance?

What an order does when the price it was waiting for never existed: Order types, explained.

This page is educational. It is not financial advice, and nothing here is a recommendation to buy or sell anything.