Common Gaps
Common gaps, also called trading gaps or area gaps, occur so often that they provide little in the way of useful signals. They normally occur during a price move at mid-range. A popular assumption is that a common gap is likely to be filled, but in fact, when they are part of a fast-moving secondary trend, they often are not filled at all. So although retracement is expected to fill the gap, that does not always occur.
For example, Figure 10.5 provides three sets of recurring common gaps, all taking place during secondary trends. Of the ten common gaps shown, only one (second to last) filled.
Figure 10.5 Common gaps (Chart courtesy ...
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