Reverse Gap Up Chart Pattern
A reverse gap up chart pattern occurs when the share price gaps up from a previous days closing price, or even during a current trading session, usually accompanied by a huge volume of shares being traded in that equity. Sometimes the reason for the gap up in share price has been made known in a press release, and other times, the share price gaps up on huge volume, on no news , at all. Either way, the reverse gap up scenario presents a great opportunity to trade on momentum, and high volatility.
As you can see in a visual representation of what the reverse gap up looks like, the share will usually backfill a bit, before continuing on in the direction of the gap up. If you want to trade equities showing this pattern, and weren’t in on that first gap up, wait for the share price to backfill, and then test the resistance where it backfilled from, before entering your trade. Once resistance above has been pierced, enter your trade, and then get ready for a wild and crazy volatile ride, with many opportunities to make money trading long, and short.
The best trade I ever made in my life involved a reverse gap up. You can read about it in my book Stock Market Baseball.