What is a Gap in Forex Charts?

Gaps are one of the most important concepts in the financial and forex markets that every trader should learn because we can use it as a trading strategy. Gaps are one of the most profitable positions for us on the chart. By learning about Gaps and the reason for their formation, we can gain a better understanding of the market and become more professional in technical analysis and price action.

When the price falls or rises sharply in the market and the price continues its sharp trend with a very small correction or no corrective movement or pullback, Gaps are created in the chart and we see many empty spaces in the chart caused by strong market movements.

Note the following photo

Photo by TradingView

A very important point to note is that the market always tends to come back and fill the Gaps in the chart. In the image above we have identified areas of Gap in the chart, when the price in the chart has risen sharply and gaps have been created, the price has moved down to fill the gap areas.

What causes the formation of Gaps in the chart?

When banks place orders in the chart and the price reaches them and they are activated, the price moves sharply and strongly, causing a gap to form in the chart. Another reason for strong and sharp market movements is economic news and bank statements, which are related to the field of fundamental analysis.

How can we profit from Gaps in the chart?

As you know, after the formation of a Gap in the chart, the price returns to the gap area to fill the empty space and then continues its main trend. At this time, when the price returns to fill the gap area, we can consider it as a pullback, and after the area is filled, we can open our position in the direction of the main market trend.

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