Gap Up & Gap Down – What They Reveal About Market Sentiment

Price gaps tell a psychological story. A gap up means buyers were aggressive before market opened. A gap down means overnight bearish sentiment. But how do you trade them? 🔹 Gap Up + Sustained Volume + Narrow Range = Bullish Continuation 🔹 Gap Up + Immediate Selling = Exhaustion or trap 🔹 Gap Down + Reversal Candle = Possible bullish reversal (gap fill setup) 🔹 Gap Down + Breakdown of support = Breakdown continuation 📌 Example: If a stock gaps up 3%, opens at ₹210 vs previous close ₹203, but selling pressure takes it to ₹200 — it’s not strength, it’s rejection. But if the stock consolidates around ₹210–212 and breaks ₹213 with volume — this is confirmation of strength. 🧠 Pro Tip: Mark pre-market support/resistance zones and combine them with intraday price action.