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2016issue C0745

Constructing late entries from serial uptrend gaps

A missed first opening is a construction problem, not a chase. Later upward gaps become a swing-entry hypothesis only after chart scale, a serial-gap-sequence, and a measured-buy-stop are written as one procedure.

  • A serial-gap-sequence is two or more upward gaps, spaced several days apart, whose later gap-up prices stay higher than earlier ones inside one continuous uptrend.
  • A close-only-gap qualifies on an opening above the prior session close; clearing the prior session high is not required.
  • The planned entry is any day after the second or third gap-up day, using a measured-buy-stop at least $0.50 above the current 15-day high.
  • Gap-trading pairs that trigger with a $2 maximum initial and trailing stop so the late long is one testable procedure.
Entries in this reading3 entries

A missed first opening is a construction problem

The specified pattern is constructed from two or more upward price-action gaps that appear several days apart inside an existing uptrend. That construction can still be written after the first opening has already printed.

Editorial reading: a missed first opening is the start of a construction problem, not a chase. Later upward gaps become a swing-entry hypothesis only after the chart scale, the gap count, the uptrend order, and the measured breakout trigger are written as one falsifiable procedure.

How a serial-gap-sequence is built

Gap-analysis reads two or more upward openings, spaced several days apart, as a single price-structure condition inside an existing uptrend. The result is a serial-gap-sequence: at least two upward gaps whose later gap prices remain higher than earlier ones inside one continuous uptrend.

The gap series must sit in that continuous uptrend, with later gap-up prices sequentially higher than earlier ones.

Chart scale and the close-only-gap

The specified scan uses 15-day, 15-minute stock charts on issues priced from $20 to $70 a share, with a high-low range of at least 10 percent. Those bounds fix the window and the kind of stock before any late entry is defined.

A qualifying gap is a close-only-gap: an opening above the prior session close, even when it does not clear the prior session high. A gap above the prior session high is not required.

The later breakout and the gap-trading stop

The planned entry session is any day after the second or third gap-up day, at a new-high breakout. Breakout means a later push through a defined high after the gap series, used to confirm that the same long hypothesis is still live.

The specified trigger is a measured-buy-stop: a buy-stop at least $0.50 above the gap-up day's high, described as $0.50 above the current 15-day high. Entry therefore requires a further breakout, not a fill at the gap itself.

Gap-trading is the complete entry and risk procedure that waits for a second or later uptrend gap, then uses that buy-stop and a fixed-dollar stop. The procedure pairs the measured-buy-stop with a $2 maximum initial and trailing stop on stock swing trades.

The construction treats repeated uptrend gaps as a concentrated pre-market buying condition and treats a later breakout above the gap series as the testable continuation signal. Editorial reading: the late long is live only when those pieces are specified together.

MDVN 15-minute price, late March–mid April 2016

Medivation climbed from the mid-$30s to the low-$50s across three upward gaps on a 15-minute chart. A trader should treat the later gaps as a construction sequence: after the second and third gap-up days, the article’s buy-stop is $0.50 above the then 15-day high, stated as $50.50 on 15 April 2016. Prices below were read off the printed candlesticks and right-hand dollar scale, not taken from a table.
Medivation climbed from the mid-$30s to the low-$50s across three upward gaps on a 15-minute chart. A trader should treat the later gaps as a construction sequence: after the second and third gap-up days, the article’s buy-stop is $0.50 above the then 15-day high, stated as $50.50 on 15 April 2016. Prices below were read off the printed candlesticks and right-hand dollar scale, not taken from a table.MDVN · 15 min · 2016-03-29T00:00:00.000Z to 2016-04-18T00:00:00.000Z

OHLC bars have no printed table. Session closes were sampled from the raster against the labeled $35–$55 scale; values are approximate to about $0.50. Volume pane was not digitized. The $50.50 trigger is the only exact figure the article states.

Educational research material, not investment advice. Historical source context does not establish present-day performance.
17 of 20 in the Gap trading track
201733-33 pp.Next on Gap tradingPremarket gap permission with cup breakouts and one tight trailNames were limited to the 20–70 price band that showed a premarket-gap of less than 2, read on a two-day one-minute chart before the 9:30 a.m. Eastern cash open.
All readings on this track · 20 readings
  1. 1988Constructing short-horizon gap and trailing-stop rules
  2. 1996Constructing closed rules for spikes, time stops and gap failures
  3. 1999Opening-gap same-day fade rules
  4. 1999Evaluating same-session opening-gap rules
  5. 1999Constructing mechanical gap-fade entry and exit rules
  6. 2000Constructing opening-gap continuation entry and exit rules
  7. 2000Gap types as trade hypotheses
  8. 2003One-day fade-the-gap rules remain unfinished across market climates
  9. 2003Gap and pivot entry rules with stops written before the fill
  10. 2007Evaluating gap and lap opens against short-horizon baselines
  11. 2007Evaluating same-day gap rules across price, momentum, and weekday
  12. 2011Session gaps as a fade-or-follow drill
  13. 2015Testing gap continuation breakouts as one procedure
  14. 2015Downside exhaustion gaps as a ten-session fade procedure
  15. 2016Constructing a gap-fill long as one entry and exit checklist
  16. 2016Gap-reversal entry and trailing-stop rules
  17. 2016Constructing late entries from serial uptrend gaps
  18. 2017Premarket gap permission with cup breakouts and one tight trail
  19. 2018Inside-range gap breakout entry and stop rules
  20. 2020Closing-range breakout after a downside gap
All 24 readings tagged Gap trading
Also on Gap trading5 readings