Gap Down

A gap down happens when a new session opens below the prior session close. It can look bearish, but the gap itself still needs context.

At A Glance

• Name: Gap Down
• Category: Session And Gap Behavior
• Type: Session Behavior
• Number of candles: Session sequence
• Typical context: At the next session open below the prior close.

How To Identify It

• Opening location: The current session starts below the prior close area.
• Gap space: The important visual is the empty space between the prior close and current open.
• Reference levels: Compare the open with the prior close, previous day low, premarket low, and nearby support.

Start with the current session open. It should open below the prior session close, then be compared with the previous day low, premarket low, and nearby support.

Context

Gap down behavior depends on the prior close, current open, premarket action, and whether price stays below or reclaims the gap area.

Gap down behavior depends on where price opens. A gap into support can bounce, while a gap below a clean level can create heavier pressure if that level turns into resistance.

What It Shows

A gap down shows the market repriced lower before the regular session continued. The important question is whether traders accept that lower price or quickly reclaim the gap area.

What To Watch Next

Watch whether price stays below the prior close, previous day low, premarket resistance, or another clear reference area. Stronger gap downs usually fail to reclaim important levels.

The read weakens if price immediately reclaims the gap area. That means the lower open was not accepted.

Common Confusion

A gap down is not one candle shape. It is session placement below the prior close.

Key Takeaway

A gap down means the new session started below the prior close. The quality of the gap depends on where it opens and whether price stays below important reference levels.

Related Lessons

• Gap Up
• Gap And Go
• Session And Gap Behavior
• Candlestick Basics