Does a gap always get filled?

It is sometimes observed that a stock price later returns to the price range where a gap occurred, known as a 'gap fill,' but this is not guaranteed. Depending on market conditions, a gap may remain unfilled.

When do gaps tend to occur?

Gaps tend to occur when major news, such as an earnings announcement, is released around the opening of trading, causing trades to skip over a certain price range.

What Is a Price Gap (Mado)?

A price gap, called mado in Japanese, is a blank space that appears on a candlestick chart between the previous day's trading range and the current day's trading range.

How it occurs

When a stock price jumps or drops sharply around the opening of trading, no trades take place in a certain price range between the previous day's high/low and the current day's price action. This blank space shows up as a "gap" on the candlestick chart.

The idea of a gap fill

When a stock price later returns to the range where a gap occurred, this is referred to as a "gap fill." While gap fills are often discussed in technical analysis, a gap is not guaranteed to be filled, and the market may continue trending without ever revisiting that range.

This article is provided for general informational purposes only and does not recommend or solicit the purchase or sale of any specific investment method or security. Final investment decisions are your own responsibility.

Frequently Asked Questions

Does a gap always get filled?: It is sometimes observed that a stock price later returns to the price range where a gap occurred, known as a 'gap fill,' but this is not guaranteed. Depending on market conditions, a gap may remain unfilled.
When do gaps tend to occur?: Gaps tend to occur when major news, such as an earnings announcement, is released around the opening of trading, causing trades to skip over a certain price range.

What Is a Price Gap (Mado)?

How it occurs

The idea of a gap fill

Frequently Asked Questions

Related terms