Gap Fill
Quick Definition
The tendency for a stock price to return to and "fill" a price gap that was left on the chart when the price jumped between sessions.
Key Takeaways
- Most price gaps eventually get filled, though breakaway gaps at trend starts are less likely to fill quickly.
- Unfilled gaps act as magnets for price, creating potential support (gap up) or resistance (gap down) levels.
- The type of gap (common, breakaway, continuation, exhaustion) determines the likelihood and speed of filling.
What Is Gap Fill?
A gap fill occurs when a stock's price retraces back to cover a gap on its chart — a range where no trading occurred between two consecutive sessions. Gaps form when the opening price is significantly higher (gap up) or lower (gap down) than the previous close, often due to earnings reports, news events, or overnight sentiment shifts. Technical analysts observe that most gaps eventually get filled, though the timeframe varies significantly. Common gaps (occurring during normal trading ranges) tend to fill quickly, often within days. Breakaway gaps (at the start of new trends) may take much longer or never fill. Exhaustion gaps (at the end of trends) typically fill rapidly as the trend reverses. Professional traders use the gap-fill tendency to identify potential support and resistance levels, plan entries on pullbacks to fill gaps, and assess the strength of a move based on whether the gap remains unfilled.
Gap Fill Example
- 1The stock gapped up 8% on earnings but slowly drifted lower over the next two weeks, eventually filling the gap completely — a common pattern with earnings gaps that lack follow-through buying.
- 2A breakaway gap at $50 during a sector rotation was never filled, serving as strong support on three subsequent pullback tests over six months.
Related Terms
Support and Resistance
Key price levels where buying pressure (support) prevents further decline or selling pressure (resistance) prevents further advance.
Breakout
A price movement where a security moves above a resistance level or below a support level on increased volume, often signaling the start of a new trend.
Candlestick Chart
A chart type showing open, high, low, and close prices for each period, with color-coded bodies indicating direction.
Volume
The number of shares or contracts traded in a security or market during a given period, indicating trading activity and liquidity.
Moving Average
A calculation that averages a security's price over a specific number of periods, smoothing price data to identify trends.
Relative Strength Index (RSI)
A momentum indicator measuring the speed and magnitude of price changes on a 0-100 scale, used to identify overbought or oversold conditions.
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