The size of the gap is very important in the Soybean market. However, Gaps greater than -12 cents to the down side have only occurred 12 times in the last decade, and upside gaps greater than 15 cents have only occurred 8 times. In the event of one of these rare occurrences, ignore the old traders saying. Gaps predict Direction Another frequently bandied about expression by the chartists and traders is that gaps predict direction after being filled. However, the time of the year incorporated with the direction of the Gap can be a good indication of future direction.
Gaps tend to occur during the months with the most uncertainty.
For the grains this equates to the weather markets of June, July and August. Follow Upside Gaps in the Month of March in the CBOT Wheat Market. The above are a few simple rules, which grain traders may wish to examine closer to see if they can be fit into your trading aresenal.