A Gap is a break between two adjacent price levels on a chart where no trading has occurred and usually occurs following a weekend or holiday. A gap typically results from a news event or economic announcement while the market is closed.
Why gaps are significant
Gaps are significant as they may indicate a strong trend or potential reversal. There are various types of gaps, such as Breakaway Gaps, which signal the beginning of a new trend, and Exhaustion Gaps, suggesting a trend may end. Trading gaps successfully can result in some of the most profitable trading opportunities in the Forex market.