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Futures gaps — that missing information in the price charts — are key indicators that help gauge market sentiment. When securities trade nearly around the clock, minor gaps occur naturally.
But sometimes the market leaves a significant gap, signaling a potential opportunity — or a cautionary tale. I’ve seen these gaps form during volatile sessions and then fill quickly. That chain reaction often points to adjustments in daily pricing that investors should not ignore.
Understanding Futures Gaps
Futures gaps occur when the closing price of one period doesn’t match the opening of the next. We see these in commodity futures like crude oil and in index futures such as the E-mini S&P 500 futures (/ES).
The dynamics behind gaps often stem from after-hours news, shifts in buying power or unexpected economic data releases. In my analysis, gaps can serve as early signals of where the market may head next. More often than not, when a gap is left open, traders watch it closely — and usually, the market fills that gap, meaning prices adjust to account for the missing range.
Trading these gaps isn’t about chasing a hunch but about reading the underlying market dynamics. A gap that remains unfilled for an extended period might indicate deeper market forces at work, suggesting that short-term sentiment is misaligned while broader participants react to triggers.
These triggers could be economic reports, major earnings surprises on stocks like Apple (AAPL) or shifts in institutional flows. When a gap is in play, the signal is clear: The market is processing new information unevenly.
Navigating the Opportunity
For those trading the futures markets, keeping an eye on these gaps is essential. Filling the gap can serve as a stop-loss zone or a profit target.
For instance, when trading energy futures such as crude oil, a gap down might signal an impending reversal if the price fills the gap. In my own trades, I’ve used gap fills as confirmation to either exit a position, or to enter on the promise of a rebound.
Watching where the trend line meets the gap is critical — that 0.618 Fibonacci level or support line on the chart isn’t random… It’s a technical indicator warning that a significant move may be unfolding.
For those approaching the futures market, daily gaps offer a manageable window into the market’s pulse. While not every gap promises a quick profit, understanding their formation and resolution leads to more informed decisions — and that’s key to smart trading.
Stay disciplined, keep your eyes on the charts and let the gaps speak. In this fast-paced environment, those few missing points could be the most enlightening part of the day’s market action.
Jeffry Turnmire
Jeffry Turnmire Trading
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I’m just a regular dude in Knoxville, Tennessee: a husband, father, civil engineer, urban farmer, maker and trader.
I’ve been at this trading thing with real money for 20-plus years, and started paper trading over 35 years ago. I have a knack for making some epic predictions that just may very well come true. Why share them? Because I like helping other people — it’s the Eagle Scout in me.
*This is for informational and educational purposes only. There is inherent risk in trading, so trade at your own risk.
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