🔍 What is CME Gap? How does it work? Is it good for market sentiment?
CME Gap 🤔
CME Gap is a price gap created in the Bitcoin Futures market of the Chicago Mercantile Exchange (CME).
This is because CME is open 5 days a week (Monday–Friday) and closed on weekends, while the Bitcoin spot market operates 24/7. As a result, if there are significant price changes over the weekend, a gap appears on the chart when CME opens on Monday.
How it works ⚙️
1️⃣ Gap Creation:
• On Friday, BTC Futures closed at $100,000.
• Over the weekend, the price in the BTC spot market rose to $104,000.
• When CME opens on Monday, it starts at $104,000 → a gap is created between $100K and $104K.
2️⃣ Gap Fill Trend:
• Historically, Bitcoin often returns to fill that gap.
• If there is an upward gap, the price tends to come down, and if there is a downward gap, the price tends to go up.
3️⃣ Trader Signals:
• Many traders trade based on gap fills.
• Gap levels often act as support or resistance.
