Unit 6 of 10 · Intermediate

Why price jumps

In one read

A gap is a jump: price opens away from where it last traded, leaving a blank space on the chart with no candles in it. Gaps happen because the market is not always open while the world keeps moving — overnight news, an earnings report, a scheduled decision — so information arrives while trading is paused and the opening auction repositions price all at once to clear the imbalance. The gap is the market pricing in what it missed. The folklore says gaps always fill — that price returns to close the blank space — but the mechanics are plainer: some gaps fill because the move overshot the news, and some never do because the news genuinely repriced the instrument. Fill is a tendency, never a law. This unit reads a generic session that gaps on an event and then partly retraces it, then hands you the session to recompute yourself.

Why price jumps

A gap is a jump: price opens away from where it last traded, leaving a blank space on the chart with no candles in it. The line does not glide there — it teleports.

Gaps happen because the market is not always open while the world keeps moving. Overnight, over a weekend, or across a scheduled announcement, trading is paused while information keeps arriving — an earnings report, an economic print, a rate decision. When trading resumes, the opening auction repositions price all at once to clear the imbalance of orders that piled up. The gap is the market pricing in everything it missed while it was closed.

The folklore says gaps always fill — that price eventually returns to close the blank space. The mechanics are plainer than the folklore:

  • Some gaps fill because the initial move overshot the news and price drifts back toward the prior range.
  • Some gaps never fill because the news genuinely repriced the instrument — the old range is simply gone.

Fill is a tendency, not a law, and treating it as a law is how the folklore gets people hurt.

A worked example

Take a generic index session — call the instrument GENCO — into a scheduled decision.

Price closes the prior session in a tidy range. Overnight the decision lands, and the next session opens with a gap well above the prior close: a blank space, the auction's one-shot repricing. Through the session, price gives some of the jump back — a partial fill — as the initial reaction cools, but it settles well above the old range, because the decision genuinely changed the picture. The gap that partly filled and the ground it kept are both part of the record.

See it in kestrel

Read a real, recorded gap instead of trusting the "it always fills" story:

npx kestrel.markets sim fomc-rate-decision-whipsaw

That runs a deterministic simulation over a generic event-driven session with a genuine repricing jump — managed licensed data, no wall time, no signup, no card — and prints a certified proof URL. Point the CLI back at the proof and it recomputes the whole record on your own machine, byte for byte:

npx kestrel.markets certify https://kestrel.markets/proof/art_d29415f0cf502f4a218a9cba

Keep it one command away: drop the kestrel.markets MCP server into your client and the next session is already wired up — no account in between.

Recompute it

Every claim in this unit recomputes from a certified proof — no account, no card.

/proof/art_d29415f0cf502f4a218a9cba
Keep readingCompression and expansion

Agent twin: /education/market-fundamentals/mf-gaps/content.md