Hiteshbhai - I wanted some help to better understand Gap Filling concept. Can you please share what your understanding is of Gap Filling and how you use it for decision making?
I will share an example with daily chart of ETSY (Nasdaq listed) which has made me curious:
It had a gap down opening on 6th May 2021 with heavy volume. Then consolidation for about a month and half. In 3 trading sessions from 22nd to 24th, most of the gap got filled really quickly. And as soon as the gap got filled, up-move got even stronger and quickly gave a 10% move in about 3 trading sessions on decent volume.
As per my basic understanding, in this case of ETSY, the gap would become resistance in a way. And as soon as resistance is broken (after filling gap) there is suddenly more force joining hands to push it higher. Opposite would be true that a stock would correct after gap is filled for something that had gap-up opening and traded higher for a while. Is my understanding correct? Or its just one-off, very short period, too random and I am thinking too much out of this.
Thanks!