Gap Fill

The tendency of price to return to and trade through an empty gap left between one bar and the next, treating the unfilled gap as a magnet — weighted by how recently it formed.

A gap is empty price space created when a bar opens beyond the prior bar's range — above the previous high (gap up) or below the previous low (gap down) — so no trades printed in between. A gap is "unfilled" until price later trades back across that empty zone. The gap-fill thesis holds that markets tend to revisit those skipped levels to complete the business that did not happen, making an unfilled gap a magnet for future price. Recency matters: a fresh gap exerts a strong pull, while a gap left far behind by an established trend becomes progressively less relevant.

Traders treat the gap zone as both a target and a level — price often reverses or pauses on first reaching an old gap. Size and context distinguish the types: small "common" gaps fill quickly; "breakaway" gaps that launch a new trend on heavy volume frequently stay open for a long time; "exhaustion" gaps near the end of a move tend to fill fast. An unfilled gap below current price is potential support on the way down; above, potential resistance on the way up.

Gap fills are a genuine, statistically observable tendency — most ordinary gaps do eventually fill — which gives the concept real footing. But "eventually" is the weakness: a gap can remain unfilled for months or years, so it is a target with no timing and no guarantee, and breakaway gaps on real news (earnings, macro) often never fill because the repricing was justified. Reliability is highest for small, low-news gaps and lowest for event-driven ones — exactly when traders are most tempted to fade them. Best used as a contextual magnet or target combined with a timing signal, never as a standalone bet that a specific gap fills by a specific time.

This definition is for informational and educational purposes only. Nothing on Finance Compass constitutes financial, investment, or trading advice. Always conduct your own research and consult a qualified professional before making financial decisions.