On a daily trade, Stock prices are determined by the forces of demand and supply at which stocks are bought and sold. It means that no trade exists until and unless one participant is willing to sell and other participant is willing to buy the same stock at same price. A rise in demand will initially raise stock prices and similarly a rise in supply will lead to falling prices.
During a trading session we see a lot in volatility between the demand and supply for a particular stock. Due to this fluctuations opening and closing prices are not always equal. Also hours between the closing bell and opening bell of the following day there are number of factors that affect the attractiveness of a particular stock.
For example, some good news might depict a rise in stock demand and further rise in prices. Along with good or bad news, a development of after trading hours (ATH) also has a major effect on the prices of the stock closing and opening hours.
Like, during intraday we can see price fluctuations that occurred due to some news. Because of some positive news prices are expected to rise we find large number of buyers than sellers. As buyers want to buy the stock at low price and sell it higher later on the other hand there are sellers who don’t will to sell as they expect more profit when prices rise. Similarly if news is out after the closing bell of the day, its impact is seen over the opening price of the following as buyers and sellers quarrel for extracting more profits. However we see a gap down because of negative news where sellers are stronger than buyers.
GAP is a term in technical analysis, which implies a price gap in the quotes flow on the chart between two candlesticks.
Visually, gaps are defined only on the charts of Japanese candlesticks or bars. So, in order to analyze them, it is better to use candlesticks. If we consider all markets (because price gaps occur not only in Forex), one of the main reasons for the of gap is a lack of liquidity. Another reason may be the beginning of a new trading session, during the period of no trading, something happened that affected the price very much.
Gap occurred usually in morning day after the market closed being open, during holiday, the market forex they, never sleep, still there are transaction in forex even buy or sell a certain currency, this transaction might not yet be recorded in data center server, and when data center opened, these history overwhelming the server and cause the gap occurred
The gap is there when the market opens after it closed for holidays, as it closed on Friday and after it, on Monday it not starts from the place of movement where it ended. There could be a gap at Sell or Buy side. People also trade on Gap as they set trades for that time now it is their luck or good analysis that they can get profit at that point.
That's gap between starting and ending price that can be formed sometimes if the asset beggins to trade with a significantly different price than at the time of trading close. That's okey and sometimes happens on markets with high volatily and where assets aren't traded 24/7
The gap is mostly visible on Japanese candlestick type of chart. It can occur in case of low liquidity, big difference in closing and opening price or during the weekends when there is no movement on the market.
Wish you all profitable trading
Gap in the weekend price happens often. in fact there will always be an indifference but normally so small to notice. when you get a big gap this has to do with somthing that may have impacted that currency when the markets were closed. this is something all traders think about when holding positions over a long time