3. CME Gaps
The CME has a one-hour daily closure, so in addition to weekend gaps, there are also daily gaps.
Schedule, all in Eastern Time:
4 PM: The New York Stock Exchange closes
5 PM: CME trading halts
6 PM: CME trading resumes
If $BTC experiences significant movement between 5-6 PM, gaps can occur on weekdays as well.
Trade the gap
1. For gaps less than 5%: Once the price moves into the gap area, expect the market to eventually fill the gap. Look for a setup that aligns with the gap-filling direction.
2. If the price rejects or wicks into the gap: Use this as a signal, similar to how you'd approach price wicks into a fair value gap (FVG) or other imbalances, and adjust your strategy accordingly.
Watch for Reject or Refill:
3. If the price moves into the gap and starts to fill, you can hold the position as it should eventually close the gap.
4. If the price just touches the gap and bounces, use that as an indicator for potential rejection, just like with imbalances.
5. Manage Larger Gaps: For gaps larger than 5%, avoid relying solely on gap-fill strategies, as they are less effective against strong momentum. Instead, wait for reversal signals from other data, and then consider using the gap as a target point (TP) for profit-taking.
6. Refine Entries: Even with these strategies, don’t neglect your entry points. Always look for proper setups and confirmations before entering a trade based on gap strategies.
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