Tracking The Footprints of WRB GapsThis is the first in a series of posts on Gaps. Gaps are a sudden supply/demand imbalance that shows up in the price bars of a chart, It's the expansion that comes after a contraction. Gaps will show us a significant area of buyers/sellers that take control and when they lose that control.
In the video, I discuss and define a Wide Range Bar (WRB) Gap and show how to mark it out on a chart. A WRB Gap is a bar larger than the last 3 bars with a space between the previous bar and the subsequent bar. We will be marking the base of the gap. If it's an up Gap, mark out the bottom 1/3 of the bar, if it's a down gap, mark out the upper 1/3 of the bar.
We can then make observations about how price interacts with the base of this gap when or if it gets there. Then begin to notice where in the swing process the Gap is happening. Don't make conclusions, just observe and learn.
There are many ways to trade Gaps but first, we must first lay out some foundations and then come up with objective ways to see them. For now, simply look for the biggest ugliest bars on your chart and mark them out and observe. These are footprints that we can follow and track.
Shane
