The Most Powerful Gap Fill Strategy You've Never Used!Hello Traders!
Today, let’s dive into one of the most reliable and underrated trading setups – the Gap Fill Strategy on the Daily Chart . This strategy works like magic when traded with patience and proper confirmation. If you’re a swing trader looking for high-probability setups, this is a goldmine for catching reversals and trend continuation moves .
When a stock or index leaves a price gap and then returns to fill that area, it often provides a clear entry point with well-defined risk and reward .
What is a Gap Fill?
Gap Up or Gap Down: A gap is formed when the price opens significantly higher or lower than the previous day’s close.
Gap Fill: A gap fill happens when price retraces and returns to cover the gap zone fully or partially.
Why It Works: Gaps often represent emotional moves or news-based reactions. When that emotion fades, price tends to come back to “fill the gap,” offering a great opportunity.
How to Trade the Gap Fill Strategy
Chart Timeframe: Focus on the Daily Timeframe for more reliable swing setups.
Identify Clear Gaps: Look for recent gap ups or downs with strong candles and volume.
Confirmation: Wait for reversal candlestick patterns (like bullish engulfing, hammer, or doji) near the gap zone.
Entry: Enter once price enters the gap zone and shows signs of reversal.
Stop Loss: Place SL below the gap zone (for longs) or above it (for shorts).
Target: First target is the top/bottom of the gap; second target based on previous support/resistance.
When Is It Most Effective?
After News-Driven Gaps (like earnings, macro events)
At Key Support/Resistance Zones
In Range-Bound or Reversal Markets
Rahul’s Tip
Gaps get filled not always — but often! Combine this setup with volume analysis and candle patterns, and it turns into a powerful swing weapon. Trust the structure, and wait for confirmation.
Conclusion
The Gap Fill Strategy on the Daily Chart offers a simple yet effective way to catch swing trades with clean entries and exits. It’s perfect for those who can wait for the right moment rather than chase every candle.
Have you used the gap fill setup in your trading? Share your experience below and let’s grow together!
