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Dollar pairs gapped at Monday open; forex gaps tell a story

Forex gap created by USD strengthening

It is unclear the reasons for these gaps in favour of the US Dollar although developments from Jackson Hole could be one of them. The gaps were tiny and not meaningful to those with long term positions al all but swing positions could easily be stopped out (which is how market makes money from both buyers and sellers). Ironic and unsurprising: in the case of AUDUSD, it is already closed.

  • EURUSD – 44 pips
  • USDCHF – 38 pips
  • GBPUSD – 21 pips
  • USDCAD – 23 pips
  • AUDUSD – 5 pips

For traders keen to find out more, these are 2 other forex gaps that we documented last year.

  1. Rare forex gap today with Kiwi, New Zealand milk powder in the news
  2. Major currency pairs open with forex gap; will NZDUSD movement repeat?

Here’s one posting from Binni Ong discussing how some of our members made money from a GBPUSD trade that gapped over a weekend by following the trade flow.

Charts of 5 dollar pairs that gapped

5 Dollar Pairs that gapped in USD favour


Forex gaps tell a story and this is the takeaway

  1.  Based on their relatively smaller gaps and the fact that their gaps are already closed or near to close, AUD and GBP are strongest against the USD.
  2. EUR appears to be weakest.

These observations can be verified here in this chart of 1-day relative performance.

1-day relative performance against USD

Strongest vs USD on left to weakest on right | Source:

Director, TerraSeeds Market Technician Pte Ltd. Trader, investor. @sohtionghum was picked ‘Top 70 Forex Twitter in 2015’.

“Dear reader, I do not have a financial license to give advice. I do not know you the reader. Your financial objective and risk tolerance may be different from mine. I am not responsible for any consequence of your action.

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2 thoughts on “Dollar pairs gapped at Monday open; forex gaps tell a story”

  1. Lai Kuan Chan says:

    Thanks Tiong Hum! and I thought something was wrong with my screen! So much to learn.

    1. Soh Tiong Hum says:

      Hi Lai Kuan, you are welcome. I encourage you to look at linked articles in this post. There are other concepts applicable to gaps that I did not cover in this post. These will complete your understanding.
      Also I’d like to share an email from Andy Ng who asked:

      Thanks for the interesting write up in the blog, however pardon me for my poor understanding but what is the main takeaway from it? How can a trader benefit from understanding gaps and how to read gaps correctly?

      My answer:
      1. Gaps cannot be predicted.
      2. Respect existing support and resistance.
      3. Trade with existing trend.
      Most important:
      1.If you scalp, don’t jump reflexively when you see a gap because they retrace. (From the post, all pairs retraced; AUDUSD and GBPUSD closed their gaps completely.)
      2.If you swing trade, there is no reason for you to anticipate a gap. Carry on trading with the flow as we have always emphasised.

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