We have spent the previous lessons studying Market Structure.
We learned how BOS describes continuation, how CHoCH introduces a potential structural change, and how MSS fits into the wider Confirmation process.
Now we turn to something different:
the space price can leave between consecutive candles.
In this lesson, we introduce Simple Gap (SG).
There are many types of gaps and imbalances discussed in technical analysis, but for our current framework we need to clearly distinguish two concepts:
Simple Gap (SG)
Fair Value Gap (FVG)
They are not the same.
And understanding that difference now will make the next lesson considerably easier.
Today, our objective is simple:
learn to recognise a Simple Gap without turning it into a trading signal.
What Is a Simple Gap?
A Simple Gap is a visible price interval between two consecutive candle ranges on the chart.
For a Bullish Simple Gap:
the Low of the new candle is above the High of the previous candle.
For a Bearish Simple Gap:
the High of the new candle is below the Low of the previous candle.
Visually:
Bullish SG:
Previous candle High
↓
GAP
↓
Next candle Low
Bearish SG:
Previous candle Low
↓
GAP
↓
Next candle High
No prices are represented inside that interval between those two consecutive candles on the displayed feed.
This definition is important.
Price moving quickly does not automatically create a Simple Gap.
Several large candles can move strongly in one direction while their price ranges still overlap.
In that case, the movement may be fast or impulsive, but there is no Simple Gap according to the definition we use here.
Speed describes how price moved. A Simple Gap describes what price left between two consecutive candles.
How Does a Simple Gap Form?
A Simple Gap appears when the next candle's displayed price range begins beyond the range of the preceding candle, leaving a visible interval between them.
Depending on the market and trading conditions, gaps may appear around:
session transitions;
market reopenings;
periods of rapidly changing expectations;
significant news or events;
other situations where consecutive candle ranges become separated.
But these are possible circumstances, not part of the definition.
The cause is not part of the SG identification rule.
We do not need to build a story about why every individual gap appeared.
What matters is the observable price relationship on the chart:
there is a visible interval between two consecutive candle ranges.
That is the Simple Gap.
Bullish Simple Gap
A Bullish Simple Gap forms when the next candle's entire range begins above the High of the previous candle.
The condition is:
Next candle Low > Previous candle High
The Simple Gap is the interval between:
Previous candle High → Next candle Low
For example:
Previous candle High = 5,420
Next candle Low = 5,423
The interval:
5,420 → 5,423
is the Simple Gap.
We can mark that interval using the Rectangle tool on TradingView.
The rectangle should cover the gap itself, not the entire candles surrounding it.
One terminology point is important:
Bullish describes the direction in which the gap formed.
It does not, by itself, mean that price must continue upward.
Bearish Simple Gap
A Bearish Simple Gap is the opposite.
The next candle's range appears below the range of the previous candle.
The condition is:
Next candle High < Previous candle Low
The Simple Gap is the interval between:
Next candle High → Previous candle Low
For example:
Previous candle Low = 5,420
Next candle High = 5,416
The interval:
5,416 → 5,420
is the Simple Gap.
Again, we mark only the actual interval between the two candle ranges.
And just as with a Bullish SG:
Bearish describes how the gap formed, not what price is guaranteed to do next.
The direction changes.
The identification principle does not.
A Fast Move Is Not Necessarily a Simple Gap
This distinction deserves special attention because it will protect us from confusion later.
Suppose SPX500 moves strongly upward through three large bullish candles.
The movement is fast.
The candles are large.
Price covers considerable distance.
But every candle still overlaps with the price range of the candle immediately before it.
Do we have a Simple Gap?
No.
We have strong price movement, but no actual interval between consecutive candle ranges.
Now suppose the next candle appears above the range of the previous candle and its Low remains above that previous High.
There is now a visible interval between them.
That is a Simple Gap.
Do not identify SG from the visual impression of speed.
Identify it from the price relationship between two consecutive candles.
Understanding Data Feed Differences
Simple Gap is defined using the candle ranges displayed on the chart.
That means the exact appearance of an SG can sometimes differ between brokers, platforms or data feeds.
Different feeds may use different available quotes, session definitions or candle construction, which can affect the exact High and Low displayed for a bar.
As a result, a small gap visible on one feed may not always appear identically on another.
This does not mean one chart must automatically be wrong.
For our analysis, use the same data source consistently and evaluate the SG from the candles displayed on that chart.
We will return to the practical implications of chart and feed differences later in the chapter.
What Happens After a Simple Gap Forms?
Price may later return to the Simple Gap.
It may trade through part of it.
It may completely cover the interval.
Or it may move away and leave the gap open for considerably longer.
When traders say that a gap has been filled, they generally mean that price has later traded back through the previously visible gap interval.
If price returns through only part of that interval, we can describe it as partially filled.
If price later trades through the entire interval, the gap has been fully filled.
But there is no rule stating that every Simple Gap must be filled immediately or at all within the period relevant to our trade.
This is important because traders sometimes treat an open gap as if price were obligated to return to it.
It is not.
An unfilled area on the chart is not a promise from the market.
For that reason, we do not predict direction simply because a Simple Gap exists.
Do We Use Simple Gap for Entries?
The short answer is:
No.
Within the Xcelerate Trade strategy, Simple Gap is not an Entry condition.
We do not:
Buy simply because a Bullish Simple Gap appears;
Sell simply because a Bearish Simple Gap appears;
assume price must return to an SG;
execute because price enters an existing SG.
Its purpose in this chapter is primarily educational and classificatory.
You need to recognize SG so that you do not confuse it with the concept that follows:
Fair Value Gap.
That distinction becomes important because FVG has a specific role inside the Xcelerate Trade Confirmation process.
Simple Gap does not.
Simple Gap vs. Fair Value Gap
This is the most important distinction in the lesson.
A Simple Gap and a Fair Value Gap use different identification rules.
Simple Gap
A Simple Gap is defined between two consecutive candle ranges.
For example:
Next candle Low > Previous candle High
→ creates a Bullish Simple Gap.
Fair Value Gap
A Fair Value Gap does not require the same two-consecutive-candle gap condition used to define SG.
Its identification uses a different multi-candle price relationship, which we will define precisely in Lesson 9.
Therefore, the absence of a Simple Gap does not automatically mean that an FVG cannot exist.
And the presence of a Simple Gap does not automatically make that area an FVG.
For now, remember:
SG → visible interval between consecutive candle ranges
FVG → separate multi-candle relationship taught in Lesson 9
They are different concepts.
Does an FVG Require a Simple Gap?
No.
This distinction is essential.
An FVG does not depend on the same two-candle condition used for SG.
That means consecutive candles may fail to produce a Simple Gap while the wider multi-candle structure can still contain the conditions required for an FVG.
We are deliberately not defining that structure yet.
That belongs to Lesson 9.
For now, the important conclusion is:
A Simple Gap is not required for an FVG to exist.
And:
A Simple Gap should not automatically be labelled FVG.
The two concepts can sometimes appear around the same strong market movement, but one does not automatically prove the other.
Why Learn Simple Gap If We Do Not Trade It?
Because good analysis depends partly on knowing what not to classify as something else.
If we move directly to Fair Value Gap without understanding the difference, every visible empty area or strong movement can begin to look like an FVG.
Learning SG first gives us a clean boundary.
When we later mark an FVG, we should be able to explain:
why it qualifies as an FVG rather than simply calling every gap-like area one.
This is part of building a repeatable analytical language.
Not every concept we learn needs to become a trade condition.
Some concepts improve our ability to classify what we see.
Simple Gap serves that role.
What to Avoid…
Calling Every Fast Move a Simple Gap
Fast movement and Simple Gap are not synonyms.
Check the price relationship between the consecutive candle ranges.
Marking the Entire Candles
The SG is the interval between the candle ranges, not the complete candles surrounding it.
Assuming Bullish or Bearish Predicts the Next Move
These labels describe the direction in which the SG formed.
They are not directional guarantees.
Assuming Every Gap Must Be Filled
Price can revisit an SG, partially fill it, fully fill it or leave it open.
There is no guarantee.
Trading the Gap by Itself
Simple Gap is not an Entry condition within the Xcelerate strategy.
Calling Every Simple Gap an FVG
The two concepts use different identification rules.
Lesson 9 will define FVG precisely.
Forcing a Simple Gap Onto the Chart
If the candle ranges overlap, there is no SG according to our definition.
Do not create one simply because the movement looks fast or important.
Searching for a Story Behind Every Gap
We do not need to claim that a specific participant created the gap or that orders were “left behind.”
The price relationship itself is observable.
That is enough.
A Practical Example
Suppose we are reviewing SPX500 on the M5 chart in TradingView.
One candle has:
High = 5,420
The next candle has:
Low = 5,424
Ask the first question:
Do the ranges overlap?
No.
There is a visible interval between:
5,420 and 5,424
We mark that interval.
Bullish Simple Gap.
What do we do next?
Do we Buy?
No.
Do we assume price must return to 5,420?
No.
Do we call it an FVG?
No.
At this stage, we have simply classified an observable price feature correctly.
Now imagine another example.
A large bullish candle moves rapidly upward, followed by another bullish candle.
But the Low of the second candle remains inside the range of the first.
There is overlap.
Therefore:
No Simple Gap.
Even though the movement looked stronger, the SG condition was not met.
That is the discipline we want:
Define first. Interpret second. Execute only when the strategy gives us a reason.
Your Turn
Open SPX500 on TradingView and use the M5 timeframe.
Review several historical sessions and look specifically for Simple Gaps.
For each candidate:
Identify two consecutive candles.
Compare their complete price ranges, including the wicks.
For a Bullish SG, check whether:
Next candle Low > Previous candle HighFor a Bearish SG, check whether:
Next candle High < Previous candle LowMark only the actual interval using the Rectangle tool.
Label it:
Bullish SG, or
Bearish SG.
Observe whether price later leaves the gap open, partially fills it or fully fills it.
Do not assume that any of those outcomes must occur.
Do not search for an Entry.
Do not classify FVGs yet.
Use the same data feed consistently while comparing your examples.
And do not force examples.
If Simple Gaps are uncommon on the feed or timeframe you are reviewing, that is completely acceptable.
The objective is correct classification, not finding a certain number of gaps.
Once you are comfortable on M5, you can repeat the recognition exercise on M1 and observe how the same definition applies at a more granular timeframe.
For every candidate, ask:
Is there actually an interval between the two candle ranges?
Or am I calling it a gap simply because price moved quickly?
Am I marking the exact interval rather than the surrounding candles?
The objective is recognition, not prediction.
Xcelerate Trade Perspective
One of the easiest ways to make trading unnecessarily complicated is to turn every chart feature into a signal.
We do not need to do that.
Simple Gap has a much more specific role in this part of the Academy:
it teaches us to classify a price gap correctly before we introduce a different concept that can look similar.
That distinction matters.
Precision is not only knowing what something is. It is also knowing what it is not.
Simple Gap is not CHoCH.
It is not MSS.
It is not an Entry.
And it is not automatically a Fair Value Gap.
In the next lesson, we add the concepts that do become part of our Confirmation process:
Fair Value Gap and Displacement.
That is where the distinction we built today becomes practically important.