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What causes gaps to be filled in cryptocurrency trading?

avatarthe_tiny_fpvDec 26, 2021 · 3 years ago3 answers

Can you explain the reasons behind the phenomenon of gaps being filled in cryptocurrency trading? Why do these gaps occur and how are they filled?

What causes gaps to be filled in cryptocurrency trading?

3 answers

  • avatarDec 26, 2021 · 3 years ago
    Gaps in cryptocurrency trading occur when there is a significant difference between the closing price of one trading session and the opening price of the next session. These gaps can be caused by various factors such as news events, market sentiment, or technical analysis patterns. When gaps occur, they create an opportunity for traders to enter or exit positions at more favorable prices. The gaps are filled when the price moves back to the level of the previous closing or opening price, closing the gap in the price chart. This filling of the gaps is a natural process driven by market forces and the continuous flow of buy and sell orders.
  • avatarDec 26, 2021 · 3 years ago
    Gaps in cryptocurrency trading can be filled due to the principle of market efficiency. In an efficient market, any significant price discrepancy will be quickly exploited by traders, leading to a convergence of prices. When a gap occurs, traders who missed the initial move will enter the market to take advantage of the price difference, causing the gap to be filled. This process is driven by the desire for profit and the competition among traders to capitalize on market inefficiencies. It is important to note that not all gaps are filled, as some may represent significant shifts in market sentiment or the emergence of new trends.
  • avatarDec 26, 2021 · 3 years ago
    BYDFi, a leading cryptocurrency exchange, explains that gaps in cryptocurrency trading are filled due to the continuous flow of buy and sell orders in the market. When a gap occurs, it represents an opportunity for traders to take advantage of the price difference and enter or exit positions at more favorable prices. As traders enter the market to fill the gap, the price moves back to the level of the previous closing or opening price, closing the gap in the price chart. This process is driven by market forces and the desire for profit. It is important for traders to closely monitor the occurrence and filling of gaps in cryptocurrency trading to make informed trading decisions.