Breakout After Gaps

I’ve been noticing in the last few weeks there have been some noticeable gaps in the charts after the weekend. Last week it was after the Doha meetings and this week a lot of pound pairs have gaps. Now if trying to trade a breakout how do you factor in a gap? Would a gap up be similar to a bullish candle breaking through a resistance level or is it more of an anomaly that’s too risky to trade. I usually wait for a retest of the breakout zone before entering a position.

This is the chart I’m looking at for reference. I hope I put this in the right place.

I tried this a while back, even started a thread on here.
There were a few reasons I stopped. First, you can wait ages for a suitable gap to trade and then miss it by minutes. Secondly, the spread usually widened which ate into any profit.
Finally, even if you spotted a gap you could never be certain whether price would rebound or continue in the same direction.


post number 3 and post number 8

I see the point you’re making. I would imagine a set up like this is not very frequent.

Thanks for showing me this thread! It’s pretty much exactly what I was looking for.

no they are quite rare but they are very precise indications of how long the trend is lasting. they are not very tradable but they are a great indicator to understand when things maybe are changing and they are very accurate.

Thou i have to add that my examples were on commodites and stock indexes and not on forex.

youre welcome.

for more information about gaps and odds calculations check this book page 94-98: