What is a futures gap?

The futures gap is the difference between the price of a commodity at the close of one trading session and the opening price of the next. It occurs when there are significant changes in market sentiment or news events that cause traders to adjust their positions. Futures gaps can be either upward or downward, depending on which way prices are moving during the period. They can also indicate potential reversals in the direction of a trend if they occur after a long period of trend behavior.

In addition to providing insight into traders' sentiment about the asset's prospects, futures gaps can also help technical analysts identify potential entry points into a trade based on the reactions of other investors. For example, buy when there is strong evidence that there is upward momentum due to positive news, or sell when there is likely downward pressure due to negative events related to the security's fundamentals (e.g., earnings reports). Understanding the reasons for these sudden changes in the markets will always remain an important part of any successful trader's analytics!

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