Today (1st April), the market opened at 11608 and there was an unfilled gap from 20th March at 11604 and an unfilled ex-gap from the same dates at 11596. The ex-gap was from the low on 20th Mar.
But once the gap is approached from above, the gap is valid but the ex-gap isn’t.
An ex-gap is made when the market opens below the low or above the high from the previous day. Closing gaps that are unfilled reamin targets until they are filled, but the same is not necessarily true of ex-gaps, for example:
- yesterday’s Close is 12600, Low is 11560, today cash open is 11540 = ex-gap 20pts, cash gap 60pts.
- suppose this gap stays open but then the market gaps up ON and opens at 12620.
- In this case, there is still no trade from 12600 to 12620, so I can target that range.
- But, there has been trade between 12600 and 11560 so the ex-gap at 11560 is not valid in this scenario.
