[Future]

I think all the text book explanation and strategies about gaps is a little misleading. First, I think its important to understand the reason behind the gap and then read for supply above the opening price and demand below it. In terms of market profile, this would be a open-test drive in which the markets test one direction before reversing to the other.

Luckily for those who traded in 24 hours markets, these "gaps" can be further analyzed by overnight price action. Overnight activity can give out clues as to the signficance of the gap. As a matter of fact, for those trading the US futures that are pretty much "24 hours", I no longer think it is a wise idea to trade off a gap chart. Instead a 24 hour chart is probably better considering all the action that takes place beyond the closing hours. Has anyone done any recent backtesting on gaps and how effective they are fading them now? From my observation, overnight trading has increased significantly over the past years in the S&P and Dow. I would not be suprised if gap plays no longer become as efficient in the near future.

I find it more effective to use overnight resistance and supports instead of playing gaps. Any further expansion is appreciated.