Trading Gaps

A trading gap occurs when an asset price jumps from one level to another without any trading activity taking place in between. This creates a visible empty space on a price chart where no transactions were executed.

In traditional finance and crypto markets, gaps often appear following significant news, economic data releases, or market opening sessions after a period of inactivity. They represent a sudden imbalance between supply and demand, where the market perceives a new fair value for the asset.

Traders often monitor these gaps because they frequently act as support or resistance levels. In some technical strategies, it is believed that markets tend to revisit these gaps to fill them before continuing a trend.

This phenomenon is particularly prevalent in lower liquidity environments or during high-volatility events in digital asset markets. Understanding gaps is essential for identifying shifts in market sentiment and potential exhaustion points in price movements.