Opening Week Gaps Explained
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What Are Opening Week Gaps?
An opening week gap refers to the difference between the previous Friday’s closing price and the Monday (or Sunday in forex) opening price of a market. These gaps occur when markets reopen after the weekend and prices “jump” due to new information, breaking news, or changes in sentiment while markets are closed.
In forex trading, markets technically run 24/5, but most liquidity dries up late Friday and resumes Sunday evening (New York time). The first quoted price Sunday often opens at a different level, creating what’s called a weekend gap or opening week gap.
The same applies to other assets such as gold (XAUUSD) or stock indices, which open an hour later (6 PM ET) after forex quotes begin (5 PM ET).
Why Opening Week Gaps Occur
- Weekend News: Major geopolitical events, economic data releases, or central bank comments can shift sentiment while markets are closed.
- Market Sentiment Shifts: Traders react to new forecasts or global developments that affect currencies, stocks, or commodities.
- Thin Liquidity: Early Sunday sessions have fewer participants, causing exaggerated price movements when orders hit the market.
Types of Market Gaps
- Common Gap: Small and short-lived; often fills quickly once trading normalizes.
- Breakaway Gap: Appears after strong news or a major shift in fundamentals and may signal the start of a new trend.
- Exhaustion Gap: Occurs near the end of a trend and often reverses soon after.
How to Trade Opening Week Gaps
- The Gap Fill Strategy
- The most popular approach among traders.
- Assumes that prices often return to Friday’s close (“fill the gap”).
- Works best when no major news justifies the move..
- The Trend Continuation Strategy
- Used when a gap is supported by strong fundamentals (e.g., surprise central bank action, election news, major trade news).
- Traders look to trade in the direction of the gap, expecting momentum to continue.
- Example: XAUUSD gapped lower on Sunday, October 26 (27), 2025, following news of a U.S.–China trade agreement. The opening week gap was relative to Friday’s $4112 close, or the low of the final hourly candle. Note selling resumed after gap was filled.
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- Example: AUDUSD October 27, 2025 opening week gap still open as it tries to breakout of its range
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- Wait for Confirmation
- Avoid trading during the first few minutes or hours when spreads are wide and liquidity is thin.
- Look for confirmation candles or retracements before entering a position.
- Practice Strict Risk Management
- Gaps can trigger volatile price swings. Always define stop-loss levels.
- Avoid over-leveraging, as gaps can extend further than expected.
How You Can Trade Opening Week Gaps
Pro Tips for Trading Opening Week Gaps
- Gaps from minor news tend to fill quickly and are ideal for short-term traders.
- Gaps from major fundamental changes often don’t fill and may mark new trend beginnings.
- Check correlated markets (e.g., commodities, stock futures) for confirmation of the move.
- The size and direction of a gap reveal early-week sentiment.
- Remember that gap pricing isn’t an exact science. The closing bid price may differ among brokers, especially when spreads widen at the close.
To sum up, opening week gaps offer valuable insight into market sentiment and can create powerful early-week trading opportunities. The key is understanding why the gap occurred and not just that it just occurred.
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