A gap is an area where no trading takes place. If a stock closes at $20 and opens the next day at $21.50, there is a “gap” between $20 and $21.50. Gaps are very important patterns because of the obvious information they provide – no trading activity within the gap. So when a price starts to fall back into the gap the stock will often fill the void. There is an old adage that all gaps will ultimately be filled, but that’s just not true. This video explains how to identify the difference and this concept in detail. Learn to trade the gaps, and you’ll soon be able to stop buying your clothes at The Gap.

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Gaps – Pre-market Gaps and how to use them