Recently, I was looking at how prices behave during different trading sessions and I came across something many traders ignore: gaps. Basically, what is a gap? It’s that gap that forms when the closing price of a session doesn’t match the opening price of the next one. It sounds simple, but the movements they generate can be quite interesting if you know what to look for.

The reasons they appear vary. Sometimes it’s due to important news, economic changes, or simply because supply and demand move quickly. The interesting part is that not all gaps are the same.

In my experience, there are four main types worth knowing. First is the common gap, which appears frequently and tends to close quickly without causing a major impact on the trend. Then there’s the breakaway gap, which marks the start of a new trend after a consolidation period, indicating a strong move in one direction. The continuation gap is another useful pattern that appears in the middle of a strong trend, suggesting it’s likely to continue in the same direction. And finally, the exhaustion gap, which occurs at the end of a trend and may signal an upcoming reversal.

Now, what is a gap in practical terms for your strategy? Basically, it’s an opportunity if you know how to use it. The first step is to identify them correctly using technical analysis tools on the charts. Then you need to confirm that the gap aligns with other indicators and candlestick patterns to ensure it’s valid.

There are three main strategies I’ve seen work. The first is breakout trading, where you enter a position following the direction of the breakaway gap. The second is mean reversion, trading with the expectation that the price will close the gap, especially in common gaps. The third is trend following, using continuation gaps to add positions in the prevailing direction.

But here’s the important part: the risks. Gaps can indicate high volatility, which comes with risk. Also, not all gaps result in significant movements. Some close quickly without creating real opportunities.

In conclusion, understanding what a gap is and how to identify each type can give you an advantage. The key is to combine this analysis with other tools to maximize gains and minimize risks. Looking at the market now, BTC is at $80.06K with +2.37% in 24 hours, while ETH is moving at $2.38K with +3.32%. Moments like these are perfect for studying how these patterns form in real time.