Penelope Hughes

February 8, 2020

What can you learn about an asset when you spot a gap in a candlestick, and how can you use this information to make a prediction?

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A gap that occurs during times when there isn’t much trading volume can be an indicator that a quick correction is likely to occur. One of the situations where this might happen is shortly before a market closes for the day when there are not many traders left placing trades. Large trades in these situations can produce the gap, but that is not necessarily reflective of the strength of the asset, i.e. if the trade had taken place when the market was more active, the gap would not have occurred. You can, therefore, predict the gap in the price of this asset and base your trades accordingly.
Gaps that appear during periods of high trading activity but where the price is not generally moving very much can be an indication of a new breakout, i.e. that the asset’s price will start moving in that direction. You can use this information to predict the price and make a trade.
If there is already a trend in a particular direction and the volume of trading is normal, the gap might indicate an acceleration of the trend. In other words, the movement of the price in a particular direction is likely to accelerate. You can use this information to base your next trade.
A candlestick formation with a gap is just one of many. However, knowing and having confidence in several will greatly improve your binary options strategy.


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