How to Trade Gap Fill in Gold Trading (Profitable Strategy Explained XAUUSD)
- VasilyTrader
- 25 minutes ago
- 3 min read
Today, I will teach you a profitable strategy to trade gaps on Gold XAUUSD.
I will explain how to predict the exact moment of a gap fill and how to identify an accurate confirmation entry signal.
Why Gaps Occur on Gold?
I wanna start with explaining why gaps on Gold occur.
Most of the gaps that you will see trading Gold are opening gaps.
The ones that form exactly after the market opens after the weekend.
They happen because of the occurrence of impactful events while the market is closed.
The market makers are trying to price in this news, creating a gap.
That's the example of a gap-up opening on Gold.
It was formed because of the accouncement of Trump on Sunday when the market was closed to impose 10% tariffs on goods from countries including France, Germany, and the UK.
Gap Structure
Now, let's briefly discuss the main elements of the gap.
Gap Up
That's a gap up.
The level where the last candle closed before it was formed is called gap opening level.
The level where the first candle opened is called gap closing level.
The area between gap opening and closing levels is the gap itself.
Most of the gaps are filled, meaning that the price will likely return to a gap opening level shortly.
That's how a gap up opening fill looks.
Gap Down
And that's a gap down structure.
Like with a gap up, we will expect that it will be filled with Gold price rising to a gap opening level.
When Gap is Filled?
The main problem is to predict when exactly a gap is going to get filled.
Very ofter then price will pass a substantial distance before returning to a gap opening level.
This strategy will help you to accurately predict that event and identify a potential reversal zone.
Gap Down Fill Strategy
After a formation of a gap-down opening, wait for a test of a liquidity zone. I suggest using this model on 1H or 4H time frames.
Then, you will need to wait for a consolidation and bullish accumulation.
The price should start respecting some minor resistance.
Your signal that the market is ready to fill a gap is a breakout of a resistance and a candle close above that.
Open buy trade immediately or on a retest of a broken resistance.
Set stop loss below the lows of the consolidation.
Your take profit will be a couple of pips below a gap opening level.
Opening Gap Down Fill Trading Example
Above is an example of trading gap down with this strategy.
After the formation of a gap down opening the price dropped lower and tested a liquidity demand zone.
The price started to consolidate, respecting some minor resistance.
Its breakout and an hourly candle close above that confirmed that Gold is ready to fill this gap.
A trade was opened on a retest of a broken resistance.
SL was set below the low of a consolidation.
TP was a couple of pips below the gap opening level.
And the trade reached the target.
Gap Down Fill Strategy
The same model and strategy will be used for trading gap up opening.
I suggest using this model on 1H or 4H time frames.
After a formation of a gap-up opening, wait for a test of a liquidity zone.
Then, you will need to wait for a consolidation and bearish accumulation.
The price should start respecting some minor support.
Your signal that the market is ready to fill a gap is a breakout of a support and a candle close below that.
Open sell trade immediately or on a retest of a broken support.
Set stop loss above the highs of the consolidation.
Your take profit will be a couple of pips above the gap opening level.
Summary
Gaps always provide profitable opportunities in Gold XAUUSD trading.
Recognizing the exact moment to enter is the key to making good money with gaps.
I hope this strategy will help!
