Pekelo's 2nd gap rule

Discussion in 'Technical Analysis' started by Pekelo, Aug 16, 2006.

  1. Pekelo


    Here is my present to the ET community on gaps:

    It is not the day or the weather that determines if a gap is going to close on the same day but the TYPE of gap. 2nd gaps in the same direction close on the same day pretty much all of the time.

    Today we have a 2nd gap because yesterday's upgap left unfilled, and we also have a morning upgap, so it should close by the end of day.

    So far this year we had 7 occurances, and all closed on the same day...

    There, you have it.
  2. According to ur model, will it fill till yesterday's close or just yesterday's high?
  3. Pekelo


    Well, it wasn't a big difference yesterday (talking of DJX) but yesterday's close.

    So far it looks like we will get an exception to the rule...
  4. Pekelo


    Just when I decide to be nice and share, we had a stinker. So the stats for the rule is 7 out of 8 so far this year...

    I still expect this 2nd gap to be filled relative soon, probably tomorrow...
  5. Pekelo


    OK, today was another fine example of the rule. Yesterday's downgap was not filled yesterday and we started the day with another downgap, thus 2 in a row.

    Right now it is pretty much closing thus we have another one for the rule...
  6. Pekelo


    We are having a second upgap in a row this morning. The chance of this getting closed today according to my observation is 85-90%.

    So going short now should give a 4 ES points gain by the end of day. ES is at 1479...
  7. Pekelo


    That was rather quick. In 12 minutes ES futures dropped 3 points and the indeces already closed the gap....
  8. Pekelo


    After yesterday's upgap left unfilled, we are going into the open with another upgap of 4-5 ES points. Should be an easy short...
  9. Thanks for taking the time to post your observations.
    I have a question,
    when you identify a gap, are you using the 4:00pm close of the previous day's price (regular day session for equities), or are you using the 4:15pm close (regular day session for futures).
  10. Lucrum


    Just noticed this thread.
    That's an interesting observation.
    I like simple stuff like this.
    #10     Jul 3, 2007