How To Trade Gap Fills: NFLX

Gaps in a stock chart occur when the price of a stock moves suddenly up or down, usually in response to news outside of market hours. In some cases, these gaps don’t last – rather, they’re “filled” as trading action brings the price back towards the previous close. These gap fills present opportunities for trading.

What Is A Gap?

A gap in a stock occurs when a stock’s price jumps between the close of one candlestick and the open of the next. Typically, this is seen on daily charts when a stock opens at a very different price than the price at which it closed the day before.

Stocks can gap up or down. A gap up happens when a stock opens above the top of the previous candlestick. A gap down happens when a stock opens below the bottom of the previous candlestick.

Gaps typically happen in response to news or other events and usually after market hours when there isn’t a chance for the stock price to rebound due to lower trading volumes. For example, a positive earnings report after market close could cause the price of a stock to gap up.


Types Of Gaps

There are four different types of gaps that can occur:

Common gaps occur without an underlying trend or event. They frequently occur in stocks with low liquidity.

Breakaway gaps occur when a gap jumps above a resistance level or below a support level. These gaps are much like traditional breakouts or breakdowns, except that there is a gap where the breakout candlestick would normally be.

Continuation gaps occur in the middle of a strong trend, in the direction of the trend. They are usually caused by a sudden increase in buying or selling action.

Exhaustion gaps look a lot like breakaway gaps, but they signal a coming trend reversal. Exhaustion gaps typically occur on low trading volume, while breakaway gaps occur on high volume.

What Is A Gap Fill?

A gap is said to “fill” when the price of a stock moves back to the pre-gap level. After a gap up, this means that the price falls back to the top of the pre-gap candlestick. After a gap down, this means that the price rises to the bottom of the pre-gap candlestick.

Gap fills can occur for a variety of reasons. In many cases, gaps fill because the original gap was an overreaction to news. After earnings reports, gaps often fill as investors look past a good or bad-sounding headline and dig deeper into the guidance.

Gaps can also fill for technical reasons. When a gap occurs, there is typically no support or resistance in between a stock’s new price and its pre-gap price. Once a stock’s price begins to fall after a gap up (or rise after a gap down), there is little to stop it from filling the gap.

Gaps can fill during the same day they form or they can take several days to fill.


Do Stocks Need to Fill Gaps?

Importantly, gaps do not always fill. Traders should never assume that a gap will fill without understanding the reasons for the gap and monitoring trading activity around the gap. Breakaway gaps often do not fill, or fill only partially since the broken support or resistance area serves as resistance or support during gap filling action.

How To Trade Gap Fills

There are many different strategies traders can use to trade gaps and gap fills. The appropriate strategy will depend on the type of gap, the reason behind a gap, whether there is a strong underlying price trend, and whether a gap or fill action is associated with increased volume.

Regardless of your strategy, there are some important things to keep in mind when trading gap fills. First, remember that gaps don’t always fill. But except in the case of breakaway gaps, they usually complete a fill once fill action begins since there is no support or resistance in the way.

You should also keep an eye on trading volume. High trading volume in the direction of a gap is usually a sign that the gap will continue rather than fill, especially if the gap is in the same direction as an underlying trend. Low volume typically signals an exhaustion gap or a coming fill.

Finally, be patient when trading gaps. It’s better to get the direction of a continuation or fill correct than to enter a position too early and be proven wrong in your analysis.

16% gain in 5 mins right at open on Friday

Summary

Gaps in stocks occur when a stock’s price jumps suddenly between two candlesticks, leaving behind a vertical gap in a chart. These gaps typically occur in response to after-hours news, but they can also result from a spurt of increased trading in the middle of a larger trend. Gaps often fill, but they don’t have to. It’s important for traders to correctly identify the type of gap they’re trading and to wait until a directional movement has formed before entering a trade.

Up with more fills or down with H&S?

⚠️ Trading Tips: There is a consensus among analysts to hold NFLXwith a target price of 343.13. However, there's a saying to not be greedy and become a bag holder of stocks. 

Monitor the overall market sentiments to trade NFLX as the bullish candles are in strength. The head and shoulders pattern is forming the right shoulder so a quick trade could be more lucrative inthe week ahead. ⭐️ Looking at calls above 332 and puts under 327 next Monday. 

Check against market conditions!

🚨 If you find the info useful, I'd appreciate if you could click on Like 👍, Comment 💬 & Repost 🔄 this article found at the bottom of your screen. Follow me for the latest news, trading ideas & strategies to ride the market daily with profits! 🤑


@TigerStars @CaptainTiger @MillionaireTiger @Daily_Discussion @Tiger_SG @TigerPM

# Technical Analysis

Disclaimer: Investing carries risk. This is not financial advice. The above content should not be regarded as an offer, recommendation, or solicitation on acquiring or disposing of any financial products, any associated discussions, comments, or posts by author or other users should not be considered as such either. It is solely for general information purpose only, which does not consider your own investment objectives, financial situations or needs. TTM assumes no responsibility or warranty for the accuracy and completeness of the information, investors should do their own research and may seek professional advice before investing.

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  • jeffry09
    ·2023-03-26
    TOP
    Not a bubble. Netflix is doing the right stuff to grow their company. they're still cheaper than the other streaming services, and it's about time the whiners paid for the service they've been receiving.
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    • ZEROHERO
      Well said 💪
      2023-03-26
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  • YvetteGunther
    ·2023-03-26
    TOP
    With 100+ million password borrowers password paying is the catalyst that will move the stock higher this year and next year. After that the catalyst will be lower price ad plans that generate both subscription and ad revenue
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    • ZEROHERO
      Very true. More profits from ads & subscriptions
      2023-03-26
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  • shining87
    ·2023-03-26
    TOP
    Whining by the whiners who want Netflix for free is running out of tears. It's all up from here. It's going to be a good year for Netflix.
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    • ZEROHERO
      The streaming service lost 700,000 subscribers when it pulled out of Russia after the Ukraine invasion.
      2023-03-26
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  • Xtzylin
    ·2023-03-25
    TOP
    good guide..learn more each day.. [Cool] [Cool]
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    • ZEROHERO
      Lifelong learning 💪☺️
      2023-03-25
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  • DdAlpha1
    ·2023-03-25
    TOP

    Great ariticle, would you like to share it?

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    • ZEROHERO
      🙏☺️
      2023-03-25
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  • YaleBrewster
    ·2023-03-26
    TOP
    No reason for NFLX to be under $400
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    • ZEROHERO
      ☺️🙏
      2023-03-26
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  • boonk
    ·2023-03-26
    TOP
    nice information. learned a good knowledge
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    • ZEROHERO
      Lifelong learning 👍
      2023-03-26
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  • POHSWEEGUAN
    ·2023-03-27
    TOP
    Great ariticle, would you like to share it?
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    • ZEROHERO
      🙏
      2023-03-27
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  • XantheJuliana
    ·2023-03-26
    The Momentum to $400+ has started.
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  • ZEROHERO
    ·2023-03-27
    @CaptainTiger Please pick this post for the community to learn the 4 types of gap fills and hiw to trade them. Thanks 🤑
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  • POHSWEEGUAN
    ·2023-03-27
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  • Sameem
    ·2023-04-06

    Ooo

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  • ekwee75
    ·2023-03-27
    [Happy]
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    • ZEROHERO
      ☺️
      2023-03-27
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  • ongcjeric
    ·2023-03-27
    Jj
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  • VivianChua
    ·2023-03-26
    ok
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  • Bullcowox
    ·2023-03-26
    Good
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    • ZEROHERO
      🙏
      2023-03-26
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  • 极痛黑魂
    ·2023-03-25
    👌
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    • ZEROHERO
      💪
      2023-03-26
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  • Jason1616
    ·2023-03-25
    Nice
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    • ALLinOne
      simple but concise answer
      2023-03-27
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    • ZEROHERO
      ☺️💪
      2023-03-25
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  • Kok Weng
    ·2023-03-25
    [Cool]
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    • ZEROHERO
      🤑
      2023-03-25
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  • Yaahh
    ·2023-03-25
    😊 thanks
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    • ZEROHERO
      🙏
      2023-03-25
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