Recently I was asked by one of my readers what do I determine to be a ‘Gap-Fill’ citing a lot of conflicting definitions, and vagueness surrounding this subject matter.
First-off there are a few popular ways in which people will define this…
– A gap-down is filled when price action the day of or in the future comes back and touches the lowest point of the price action from the day prior to the gap down – i.e. the lower candle shadow
or
– when price action after the gap down pentrates the candle body from the day previous to the gap down (ignoring the shadows on the candle all together).
And of course these definitions just have to be flipped for gap-ups.
Then of course there is the third definition… and the simplest, easiest and the one that I subscribe to.
