# Gaps # Gaps ## Why Gaps Occur - Good/bad earning announcements that differ from market expectations - News / geopolitical events - Overall market sentiment shifts - Order imbalances — big buy/sell orders from institutional traders - Rumours — company partnering, leaked info, speculation **92% of gaps eventually get filled** — so gaps are always good targets. If you know traders target them and they align with other areas of confluency (zag zone, S/R, Fibonacci), they're great profit-taking zones. --- ## Types of Gaps [![Gap types overview](https://pdb.conorbriggs.com.au/uploads/images/gallery/2026-02/scaled-1680-/zUx4JbBQMZ3yMS9n-image.png)](https://pdb.conorbriggs.com.au/uploads/images/gallery/2026-02/zUx4JbBQMZ3yMS9n-image.png) **The natural sequence within a trend:** Breakaway gap (start of trend) → Runaway gap (middle, public participation) → Exhaustion gap (end, excess phase reversal). Maps directly to accumulation breakout → public participation → excess. ### Common Gaps - Appears in a weak or calm market - No reason or catalyst for the gap — just minor supply/demand imbalances, market noise, routine technical adjustments - Often filled quickly — **100% of common gaps get filled** - Low volume — no significant surge in trading activity - Useful for **scalping** — if something gaps up for no reason, there's a good chance it fills that day or within a few days. Look for nearby unfilled gaps as profit targets - **Real trade example:** Sonic Healthcare gapped up for no reason → educator entered knowing the gap would fill → price came back and filled it same day, also filling a prior gap below. Then the next nearby unfilled gap above became the next target [![Common gaps example](https://pdb.conorbriggs.com.au/uploads/images/gallery/2026-02/scaled-1680-/BUCj7DOf5b17iTgw-image.png)](https://pdb.conorbriggs.com.au/uploads/images/gallery/2026-02/BUCj7DOf5b17iTgw-image.png) ### Breakaway Gaps - Price suddenly breaks through a well-defined structure (support or resistance) in the form of a gap - Usually confirms a breakout — signals the **start of a new trend** - Happen at the end of a consolidation pattern or range and usually mark a new trend beginning - Larger than common gaps — reflects a strong shift in market sentiment - Usually followed with a **significant increase in volume** — confirms breakout strength - Do **NOT** fill quickly — represents a decisive market move, price generally continues in the gap direction - **Stop loss:** Below the gap for upward breaks, above the gap for downward breaks. The gap itself acts as S/R - Usually caused by: - Earnings reports (exceed or fail to meet expectations) - News announcements (mergers, acquisitions, regulatory changes) - Market sentiment shifts - Technical breakouts (breaking key S/R where stop losses are clustered) - **A2 Milk example:** Had THREE breakaway gaps in succession — each one gapped below a major support level on high volume. Earnings downgrade after earnings downgrade, each time breaking the next support. The high volume on each confirmed institutional money exiting [![Breakaway gaps example](https://pdb.conorbriggs.com.au/uploads/images/gallery/2026-02/scaled-1680-/h4rPlcF6P8SScI20-image.png)](https://pdb.conorbriggs.com.au/uploads/images/gallery/2026-02/h4rPlcF6P8SScI20-image.png) ### Runaway Gaps (Continuation / Measuring Gaps) - Appears when the market is gaining or falling quickly — in the **middle** of an established trend - Signals dominant buyers or sellers — high probability of **continuation** - Usually NOT filled (until the trend eventually ends and the major correction begins) - Followed with moderate to high volume — confirms trend strength - Usually in the **public participation phase** — where the public starts getting involved and everyone piles on - **Measuring tool:** The distance from the trend start to the runaway gap can be projected forward to estimate the potential remaining length of the trend (similar to a bull flag measured move) - **If you see a runaway gap, don't take profit at the next resistance** — the trend still has momentum and should continue. It's telling you NOT to exit yet - **How to distinguish from exhaustion:** Runaway gaps happen in the MIDDLE of the trend. If you're getting gaps at the PEAK after a long overextended run = exhaustion, not runaway [![Runaway gaps example](https://pdb.conorbriggs.com.au/uploads/images/gallery/2026-02/scaled-1680-/aF8ec60qADnwLSvL-image.png)](https://pdb.conorbriggs.com.au/uploads/images/gallery/2026-02/aF8ec60qADnwLSvL-image.png) ### Exhaustion Gaps > **If you gap and then pivot within a few days, it's most likely an exhaustion gap** - Occur near the **end** of an existing trend, after a prolonged price movement — the trend is reaching its climax - Usually accompanied by a **spike in volume** — the final rush of buying/selling (capitulation or complete greed) before the trend reverses. This volume often includes retail traders, indicating the end of institutional interest - Exhaustion gaps are likely to be **filled quickly** as the market corrects and reverses - Signal a **high probability of a trend reversal** - Can be used to enter a trade in the opposite direction — exhaustion gap at the bottom might be a good time to enter long - Everything usually looks very **overbought** (RSI above 80) or the gap happens **into bearish divergence** - **How to confirm it's exhaustion:** - RSI very overbought when the gap occurs - OBV/volume showing institutional money NOT confirming the move (lowering OBV = retailers driving it, not big money) - Pivot within a few days (doji → bearish engulfing after the gap = classic exhaustion confirmation) - Already at the excess phase of the trend - **Zip example:** Breakaway gap (start) → Runaway gap (middle) → Exhaustion gap (end). RSI very overbought when the exhaustion gap occurred, followed immediately by a doji and bearish engulfing = confirmed exhaustion. Same pattern on NVX and LKE ### Professional Gaps (Institutional Gaps) - Caused by actions of institutions, usually from: - Earnings reports - Portfolio rebalancing based on macro trends - Insider/privileged information or proprietary analysis - Show sentiment and strategic decisions of institutional players - Can remain **unfilled for a long time** if they reflect long-term institutional positioning — especially mining discoveries - Usually after major announcements — e.g. PointsBet expanding to America, mining companies announcing discoveries - **These signal the very beginning of a new trend** — institutional money flowing in - In Australia, most common with **miners** making discoveries — institutions unpack the report, like what they see, and start buying. Sometimes takes days as they read more and keep buying - **PDN example:** Went from $0.006 to $0.019 in one gap (tripled), then 10x within two days as institutions kept reading the report and buying. Eventually went to $0.30+ — nearly 100x. That gap never filled because it was a genuine major discovery - **3DP example:** Institutional money came in at $0.05, gapped up to $0.08, eventually went to ~$1 ### Fair Value Gaps (FVGs) - A place where price has moved **too quickly** creating a void — most popular in **crypto** due to 24/7 trading (no normal gaps from market close/open) - **Not an actual gap on the chart** — it's the difference between the top of one candle and the bottom of the candle two periods later, with a big candle in between. The "hidden gap" in the body of that middle candle - Very popular in **SMC (Smart Money Concepts)** — all about imbalances and liquidity - Usually filled quickly due to market seeking to correct the imbalance - Volume: **low volume gaps may fill quicker** than high volume gaps - **Confluency power:** If an FVG aligns with a golden pocket zone (382-618 Fibonacci), that's two independent reasons to expect a retracement to that area. Use FVGs as profit-taking targets when they align with your zag zone - Crypto & Forex most-filled timeframes: - 1 hour - 15 min - 5 min - 3 min [![Fair value gaps example](https://pdb.conorbriggs.com.au/uploads/images/gallery/2026-02/scaled-1680-/zGWbJr8bOWXPTPuc-image.png)](https://pdb.conorbriggs.com.au/uploads/images/gallery/2026-02/zGWbJr8bOWXPTPuc-image.png) --- ## Using Gaps for Confluency Gaps are another tool for your confluency checklist — another river meeting the zone: - **As targets:** If there's an unfilled gap that aligns with your Fibonacci zag zone (382-618) and/or a horizontal S/R level = high-probability take-profit zone. "Profit taking is your zag zone. If you can combine that zag zone with an FVG or a gap, it's giving you more confluency to take your profit there" - **As entries:** If a gap fill brings price down to a zone where you also have support, Fib level, and bullish divergence = entry confluency - **For trend identification:** Breakaway gaps confirm breakouts. Runaway gaps confirm trend strength (don't exit yet). Exhaustion gaps warn of reversal (start looking to exit) - **Scalping with common gaps:** If something gaps for no reason, look for nearby unfilled gaps as quick profit targets — they tend to fill within hours or days