Gap is a situation in which there is a sharp difference in price but no trading occurs during the period. It can occur either when the market moves up or down.In the Forex market, gap appear mainly on weekends because, this is the only time when the Forex market is closed. The gap may occur for a very short time, for example, one minute after the release of new data.

Gap may also occur when economic data is released especially if it contains data that the market does not expect and when major news events are released.

Gap can reflect market sentiment. When the gap increases, it means that no trader is willing to sell at the current gap level. When the gap decreases, it means that no trader is willing to buy at the current gap level.

Gap can sometimes lead to corrective price action. In other words, after a gap occurs, the price reverses its trend and "fills" the gap.

If a gap appears, it is usually a signal to stay out of the market The gap can reflect the strength of the direction of the gap, or can be "reduced" by moving the price in the opposite direction of the gap. If a gap appears before a trade is about to be entered, it is wise to cancel the trade.