Daily Candle Gap Pattern
Daily Candle Gap Pattern provides data only for gaps that are filled during the same trading day.
The analysis includes 2 types of candle actions that create the gap. The gap resulted from the downward movement and the gap created by upward movement.
Downward action daily candle gap
The downward daily gap is considered only when the candle opens below the lowest value of the previous candle. During the trading day, the current candle must reach a greater value than the lowest value of the previous candle, thus closing the gap.
In the picture on the left, note, that the green candle opened below the lowest level of the previous red candle. Also note, that it doesn’t matter if candle closed in gain (green) or loss (red). The candle’s highest value must overlap with the previous candle’s lowest value.
Upward action daily candle gap
In this case, the upward daily gap is considered only when the candle opens above the highest value of the previous candle. During the trading day, current candle must reach a lower value than the highest value of the previous candle, thus closing the gap.
In the picture on the right, the red candle opened above the highest value of the previous green candle. Also note, that it doesn’t matter how the candle closes. The candle’s lowest value must overlap with the previous candle’s highest value.
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