Gapping Play

The lower and upper zone Gapping Plays are specific versions of the Window.

They also are continuation patterns. During a trend, there often happens to be consolidation zones that let prices catch their breath. These consolidation zones are often composed of uncoordinated moves.

When a window appears in the upper zone of this consolidation, this is called an upper zone gapping play which often triggers a new start in the trend.

On this chart, we observe an uptrend and a consolidation zone where prices oscillate between an oblique resistance and an oblique support. When the window appears, prices clearly come out of this zone; this is what is called an upper zone gapping play.

One can either take advantage of the opportunity to enter along the main trend or wait for a pullback before entering. We then can see 3 pullbacks that would allow an entry along the trend with a relatively limited risk since the invalidation stop was placed below the lower part of the window, i.e. 50 to 100 pts lower.

This is an example of combining various technical analysis methods. Other gaps have appeared in the consolidation zone and should they make prices come out of the triangle, it would strongly increase the validity of the signal.

The bearish equivalent to this pattern is the lower zone gapping play in which prices start on a bearish trend after a consolidation zone. It can be interpreted in the same way as an upper zone gapping play and the invalidation stop will then be placed right above the window.