At the end of a downward trend or a gap out of consolidation after an upward trend
After confirmation of move in gap direction
On a reversal, just below the reversal point. On consolidation, just below the support level of the consolidation formation.
On reversal, 50% retracement level. On consolidation, 100% of previous trend before consolidation.
On reversal, trade Support, Short... on consolidation, trade Consolidation, Failure...
Fibonacci standard
*For a short trade on a Measured Gap, invert the chart and trading strategy.
"Breakaway gaps... occur when the price breaks out from a price pattern. The gap empathizes the urgency of buying in an upside breakout and the urgency of selling in a downside one. In really powerful moves... these gaps are rarely closed."
Martin Pring
Introduction to
Technical Analysis