π§΅A+ Setups - The Gap Fill
Last week someone asked me what my favorite A+ setup was. After some thought, I've decided to do a thread on one of my favorite setups, Gap Fills.
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Last week someone asked me what my favorite A+ setup was. After some thought, I've decided to do a thread on one of my favorite setups, Gap Fills.
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First and foremost this is an A+ setup to ME. What works for me might not work for everyone. We are all different with respect to trading, mindsets, sentiment, etc. I'm sure there are plenty of other setups out there that are great. This is just one of my favorites.
Gap Fill
What is a gap?
Gaps are areas on charts where the price moves up/down overnight with no trading in between leaving a gap in the price action. We tend to see these gaps on moves overnight.
What is a gap?
Gaps are areas on charts where the price moves up/down overnight with no trading in between leaving a gap in the price action. We tend to see these gaps on moves overnight.
Gap Fill Support:
In the chart below you can see this specific stock gapped up overnight and then filled its gap intraday.
This graphic shows the gap at the wick of the candle.. Personally, I like to chart them at the close fo the previous day's candle.
In the chart below you can see this specific stock gapped up overnight and then filled its gap intraday.
This graphic shows the gap at the wick of the candle.. Personally, I like to chart them at the close fo the previous day's candle.
In that previous example when the stock filled the gap, that level acted as gap-fill support. Depending on the level and where we are on the chart, I like to scalp calls off of a gap like so.
Rarely do I take trades solely off one piece of conviction. I like to trade gap fills when they are overlapping with a previous key level of support/resistance, a supply/demand zone, Fibonacci retracements, trendline tests, etc.
The list goes on and on.
The list goes on and on.
In this graphic, we can also see an example of
"Gap Fill Resistance".
"Gap Fill Resistance".
It's important to note that just because there is a gap up/down, it does not always mean that the gap fill will automatically bounce or reject. That's why it is very important to note the more pieces of conviction the better and effectively managing risk is king.
Here's a trade example from earlier this year where we can see a clear gap-fill resistance level.
I played calls off the TL targeting gap fill of 405.31 for my exit. As you can see price chopped around before rejecting that level.
I should've played puts on the way down tooπ
I played calls off the TL targeting gap fill of 405.31 for my exit. As you can see price chopped around before rejecting that level.
I should've played puts on the way down tooπ
Here's another great example I was drawn to thanks to my guy @Moe_Mamba_ for pointing it out.
The first chart is the daily on $CCL where you can see a large gap down in late September filled a month later and rejected.
The second is the 5-minute intraday chart.
The first chart is the daily on $CCL where you can see a large gap down in late September filled a month later and rejected.
The second is the 5-minute intraday chart.
This is a very basic overview of gap-fill support and resistance. As noted earlier, the more pieces of conviction the better & effective risk management when trading this strategy is most important. To me, the larger the gap the more effective it is.
β’Follow me @RamsayRippers for more threads on trading strategies, market opinions & trading psychology.
β’For additional trading resources like this, join the @Kane_Capital discord & check the edu section for 100s of pages of free edu.
β€οΈ & π if you found this helpful π€
β’For additional trading resources like this, join the @Kane_Capital discord & check the edu section for 100s of pages of free edu.
β€οΈ & π if you found this helpful π€
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