I will explain the strategy illustrated in the image called
"Gap Retest Strategy", which is one of the trading strategies that relies on supply and demand zones, and filling price gaps. Here is a simplified step-by-step explanation:
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What is a Gap?
A price gap appears when the price suddenly opens higher or lower than the previous closing price, creating an area where no trading has occurred. These gaps are often filled later (meaning the price returns to cover them).
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Explanation in order according to the image:
1. A bearish gap forms:
The price opens with a large red candle, and a gap appears downward.
This gap means that the price dropped suddenly without trading in that area.
2. Strong decline after the gap:
The price continues to decline to reach a new low.
3. Price retracement upward (return to test the gap):
The price begins to rise gradually and fills the gap.
It reaches the supply area — which is the area where the sharp drop began, and here it is expected that sellers will return to the market.
4. Entry point:
When the price reaches the supply area and fills the gap, this is the entry area for selling (short trade).
The trade can also be reinforced (Add to Position Area) when the price starts to decline again.
5. Target:
The primary target is for the price to reach the previous low or exceed it,
as shown $ Initial Target
