Gap Rules: Do They Still Hold True?

In the past, back when price action was left to its own devices of supply and demand, there was a behavioral rule for two consecutive gaps in the same direction. Most of the time, one or both would be filled that same day. Matter of fact, you might go an entire calendar year and never see this two-gap setup remain unfilled.

Not any more. All those old-time gap rules are for now dead and gone.

ES traded from its open range to lower 233 and back up into the range with no-volume chop. Day two of tight range action. As always, depending on how you managed your exits depended on whether you made money or not. There was opportunity for small trades in a couple spots on the chart today, that’s all.

Today and/or Friday are poised for directional moves. Price won’t remain pinned congestive forever. If you are a trend trader this is good, and if you are a range trader, do not fade the directional push once it breaks out.

For more daily updates from Austin, visit his blog at Coiled Markets.