Trends/Support and resistance

Gap levels

A price range where nothing traded because a bar opened above the previous bar's high, or below its low.

Support and resistanceBest on 3M, 6M, 1YAlso called price gaps, unfilled gaps
Gap levels diagramIllustration of the gap levels shape. It is a sketch, not real price data.Open gapEdge
Illustration of the gap levels shape. It is a sketch, not real price data.

What it shows

A gap forms when price jumps from one bar to the next without trading in between, often after news or earnings. The empty range is the gap. It is called filled when price later trades back through all of it.

We mark unfilled gaps as zones and show how long they have been open. The edges of a gap are levels some traders watch.

How we find it

The same code that draws it on your chart follows these steps, with the same result every time.

  1. Find bars whose low is above the previous bar's high (gap up), or whose high is below the previous bar's low (gap down).
  2. Require the gap to be at least 1% of price.
  3. Draw a zone from the previous bar's extreme to the new bar's open.
  4. Mark the gap filled when a later bar trades across the whole zone.

Starting values: Minimum gap size 1.0% of price; Fill rule price crosses the whole gap. These are proposed and will be tuned on real price data before launch.

How to read it

  • The gold zone is the empty range.
  • The dot shows price coming back to the edge of the zone.
  • A filled gap is removed from the chart.

Status labels you may see

LabelWhat it means
Gap openPrice has not traded through the whole zone.
Gap partly filledPrice entered the zone but did not cross it.
Gap filledPrice crossed the whole zone.

What cancels it

Once price trades through the whole gap, it is filled and removed.

What traders check next

  • How big the gap was and what caused it (news, earnings).
  • Whether volume was high on the gap day.
  • How long the gap has stayed open.

Limits

  • Many gaps fill quickly and many do not.
  • Gap size depends on the chosen minimum.
  • Weekly charts hide most gaps.

Try it in forecastviz

  • Open any ticker and choose Support and resistance → Gap levels in the left menu.
  • Switch between 3M, 6M, 1Y to see how the picture changes.
  • Compare with Breakaway gap and Runaway gap on the same chart.

Questions

Do gaps always get filled?

No. Some stay open for years.

What causes a gap?

Usually news that arrives while the market is closed.

Related trends

Further reading

  • Murphy, Technical Analysis of the Financial Markets
  • Edwards and Magee, Technical Analysis of Stock Trends

Educational only. Not financial advice, and not a price forecast. Charts are drawn by code from past price data, which may be delayed.