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Gaps Following Three Higher Lows

4 Comments

Friday, June 19, 2009 at 4:52PM

Gap Guy tagged

Dow,

Nasdaq 100,

Russell 2000,

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Patterns

Here's some research (from my Los Angeles Traders Expo presentation) showing a nifty little pattern to remember next time it appears. It assumes you faded the opening gap and closed it out at gap fill (prior day close) or exited at end of the day.

Note: three "higher highs" give comparable results, but the three "higher lows" is a slightly better indicator in my opinion.

I think the slide says it all - good gapping!

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Reader Comments (4)

Scott:

Please tell the time frame of the three higher low candles? Three days, or just before closing three minutes?

Higher lows for oscillators and lower lows for price is convergence, very bullish.

Kevin

Jun 21, 2009 at 9:07PM |

Kevin

Thanks for the question Kevin - the three higher lows refer to Daily bars.

Scott

Jun 21, 2009 at 9:21PM |

Gap Guy

Scott, does the gap fill usually happen quickly, i.e. within 30 minutes or is this an entire day or longer play?

Jun 22, 2009 at 10:44PM |

Bill

Bill - average (mean) time to fill is about 1.5 - 2 hrs. However, about 75% of those that will fill, will do so within the first 15 minutes. See the next blog entry (below) on this subject.

My average gap trade last year lasted about 1 hour.

Scott

Jun 23, 2009 at 11:21PM |

Gap Guy

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