Tbh I think filling the gap, and TA in general, is more of a self fulfilling prophecy because humans try to make sense out of randomness. If enough people hold off on buying because they’re waiting for the gap to get filled, it can tip the odds. I’m not sure what the original reason for it was (the video posted above is interesting), but statistically they’re very likely to get filled
True.
It's also based on human psychology and psychology of the crowds. For example:
- human are adverse to loss, so when there was significant trading at some level, and then SP drops, there are many holders that wait to get back into positive, and sell immediately. This creates overheads.
- double top or double bottom usually means that on a retest, buyers(top) or sellers(botom) were not able to overwhelm opposite side and break to a new price level. This is matter of sentiment, so when they fail, sentiment changes and reversal takes place. However, no such thing as triple bottom/top. This kind of action is exhausting (say "triple"/"quadruple" top) existing sellers, and once they're gone, price is free to run up
- gaps means that no trading took place in particular range of prices. So there are no invested traders in that range. This creates a vacuum and if and when price retreats to the gap (say breakout), then it gets sucked in down until it's filled, as no interested parties are there, sellers or buyers. As gap is filled, people that sold and regretted sale may step up to buy back, as well as people that have bought there or higher
- Head and shoulder shows that buyers, or rather buyers capital is being exhausted. Inverse head and shoulders shows the same for sellers, either for short sellers, or investors interested in selling have sold everything they needed to
- cup and a handle shows long consolidation after which there is a huge base of investors that have consolidated at particular price range, and path of lesser resistance is up.
- Etc...
These are all psychology phenomenons, and as such not very reliable, as they get influenced with change of sentiment, but there is some logic and science behind them...