50ftCat,What Dan Norcini says about gaps:-

50ftCat,

What Dan Norcini says about gaps:-

Gaps represent areas of either pent-up buying (demand) or pent-up selling (supply). Typically as markets move higher they periodically experience price retracements. If those retracements do not make it back to the gap area before fresh buying enters and takes them subsequently higher once again, that is a sign of extremely strong demand. Buyers who missed the first leg up are not willing to wait any longer to get in. Their eagerness to buy prevents the market from moving down and filling the gap.

If the market moves down during a price retracement and fills the gap region, and then moves subsequently higher, it is still a bullish signal since the demand that first sparked the strong upside move is still intact.

The difference between the two scenarios above is that when the gap remains unfilled, it is much more strongly bullish.

Eventually the gap will be closed but it might take as long as a year or even longer depending on the fundamentals behind the market.

In one last scenario, if the gap is filled on any price retracement and the market fails to then turn back to the upside and continue moving higher within the next session or two or three, it is a signal that the original demand that led to the upside gap is no longer present and players are re-evaluating the dynamics of that market.