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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: Compare the previous regular-session close with the current regular-session open. Extended-hours trades may occur between them. An opening gap from the close can still lie inside the previous session's high-low range.
  • 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

Course Context

Chart Reading And Market Structure

Session And Gap Behavior

Lesson 62

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Course Path

Move through the course in order, or jump to the lesson you need.

Lessons

Chart Reading Basics And Core Levels

Lesson 1Candlestick Basics: How Candles WorkLesson 2Support and Resistance: A Practical Trading GuideLesson 3How to Draw Support and Resistance Without Cluttering Your ChartLesson 4Support Levels: How Traders Read, Use, and Review SupportLesson 5Resistance Levels: How Traders Read, Use, and Review ResistanceLesson 6Key Levels Trading: How to Build a Practical Level Map

Swing Structure

Lesson 7Swing Highs and Swing Lows: How Traders Read Market StructureLesson 8Higher Highs and Higher Lows: How Traders Read Uptrend StructureLesson 9Lower Highs and Lower Lows: How Traders Read Downtrend Structure

Rejection, Breaks And Reclaims

Lesson 10Price Rejection: How Traders Review Failed Pushes at Key LevelsLesson 11Breakout Trading: How to Read Breakouts Without ChasingLesson 12Breakdown Trading: How Traders Review Support BreaksLesson 13Level Breakout: How to Review What Happens After Price Clears a Key LevelLesson 14Level Reclaim: How Traders Review Price Winning Back a Key AreaLesson 15Break of Structure: How Traders Review Market Structure Changes

Intraday Reference Levels

Lesson 16Pivot Levels: How Traders Review Chart Turning PointsLesson 17Previous Day High Low: How Traders Review PDH and PDLLesson 18Premarket High Low: How Traders Review PMH and PMLLesson 19High of Day: How Traders Review HOD LevelsLesson 20Low of Day: How Traders Review LOD LevelsLesson 21New High of Day: How Traders Review NHOD Alerts

Ranges, Compression And Pattern Basics

Lesson 22Compression Trading: How Traders Review Tightening Price ActionLesson 23Consolidation Trading: How Traders Review Sideways RangesLesson 24Chart Pattern BasicsLesson 25Chart Pattern Deep-Dive Lessons

Gaps

Lesson 26Gap Fill Trading: How Traders Review Gap Areas

Bullish Candle Patterns

Lesson 27HammerLesson 28Inverted HammerLesson 29Bottoming Tail CandleLesson 30Bullish Pin BarLesson 31Dragonfly DojiLesson 32Bullish EngulfingLesson 33Piercing LineLesson 34Morning StarLesson 35Three White Soldiers

Bearish Candle Patterns

Lesson 36Shooting StarLesson 37Hanging ManLesson 38Topping Tail CandleLesson 39Bearish Pin BarLesson 40Gravestone DojiLesson 41Bearish EngulfingLesson 42Dark Cloud CoverLesson 43Evening StarLesson 44Three Black Crows

Indecision And Neutral Candles

Lesson 45Standard DojiLesson 46Long-Legged DojiLesson 47Spinning TopLesson 48High-Wave CandleLesson 49Inside Bar

Momentum And Continuation Candles

Lesson 50Full Body CandleLesson 51MarubozuLesson 52Bullish MarubozuLesson 53Bearish MarubozuLesson 54Breakout CandleLesson 55Breakdown CandleLesson 56Rising Three MethodsLesson 57Falling Three MethodsLesson 58High-Volume Green CandleLesson 59High-Volume Red CandleLesson 60Outside Bar

Session And Gap Behavior

Lesson 61Gap UpLesson 62Gap DownLesson 63Gap And GoLesson 64Gap FillLesson 65Exhaustion GapLesson 66Red-To-Green MoveLesson 67Green-To-Red Move

Chart Patterns In Context

Lesson 68Bull Flag PatternLesson 69Bear Flag PatternLesson 70Bull PennantLesson 71Bear PennantLesson 72Cup and Handle PatternLesson 73Base BreakoutLesson 74Ascending Triangle PatternLesson 75Descending Triangle PatternLesson 76Symmetrical Triangle PatternLesson 77Wedge PatternLesson 78Rising WedgeLesson 79Falling WedgeLesson 80Rectangle PatternLesson 81Channel PatternLesson 82Double TopLesson 83Double BottomLesson 84Triple TopLesson 85Triple BottomLesson 86Head And Shoulders PatternLesson 87Inverse Head And ShouldersLesson 88Rounding Top PatternLesson 89Rounding Bottom PatternLesson 90Parabolic MoveLesson 91Failed Breakout PatternLesson 92Failed Breakdown PatternLesson 93VWAP Reclaim