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Mean reversion
How does gap fill bet that the gap will finish?
Gap fill
What it bets
After the open jumps away from the prior close, price will still come back to that prior close and fill the gap.
How the rule is written
After a gap, trade the other way. The target is the prior close. Leave when the fill is done. If the gap keeps widening past a limit written in advance, the trade has failed. As with trading in the direction of the gap, first define what counts as a gap in this market.
When it fails
A gap on a trend day may stay open for the whole session. The earlier the trade goes against the gap, the more complete the loss.
Do not confuse it with
Gap continuation asks the gap to hold, and only then trades with it. The two see the same gap and take opposite actions.