Why Adjacent Candlestick Bodies Can Show Price Gaps
Summary
The document explains why one candle’s close and the next candle’s open may not match. A common cause is a market closure: information arriving while trading is halted can be reflected in the reopening price. This can create gaps between daily stock candles and, for foreign exchange, between weekly candles when the market closes for the weekend. Rapid price changes may also produce gaps on short intraday intervals.
The responses also identify chart data quality as a possible source of apparent gaps. Missing quotes, inaccurate timestamps, or a broker’s feed can leave discrepancies in intraday charts; one answer suggests that a charting platform may fail to revise candles after new data arrives. The discussion gives examples of different platforms displaying different connections, but no independent data analysis to determine the cause in those screenshots. Traders should therefore distinguish genuine price moves across a closure from artifacts introduced during quote collection or candle construction.
Key ideas
- A market closure can separate one candle’s close from the next candle’s open as new information reaches the market.
- Daily gaps are common in markets that close overnight, while foreign exchange gaps may appear around the weekend.
- High volatility can produce gaps even on short intraday timeframes.
- Missing quotes, timestamp inaccuracies, or broker feed problems can create apparent chart gaps.
- Different chart displays alone do not establish whether a gap is a real market move or a data artifact.
Tags
Full text
# Why doesn't the candlestick bodies align to open/close? # Why doesn't the candlestick bodies align to open/close? Studying some candlestick theory, I'm repeatedly confronted with pictures where the previous (or subsequent) open/close bodies does not align with what is found before (or following after). This is often seen in descriptions of `engulfing` candlestick patterns. Such as this: So since this is so often the case, I'm wondering if this is simply due to sloppy diagrams, an error or is actually possible? I can't actually imagine how this would be possible, unless the exchange presenting the candles has been closed (while others have been open) and then choose to ignore the data in between. Q: What (if anything) can cause candlestick bodies, not to align? EDIT: 2018-06-04 I just made these screenshots of the 1M on MT4 and TV. Clearly MT4 shows a bunch of weird gaps, while TV shows proper candle connections. ## Answer by LeoAn (score 3, accepted) https://quant.stackexchange.com/a/41542 Everytime the market closes and quotations stop, the new emerging information will necessarily be incorporated into the future opening price. For example the daily gaps are a typical stock markets phenomenon: the quotes stop at the end of the day and the following trading-day reopening price have to absorb the overnight information. In the Forex market instead, gaps may appear mostly in the weekly candlesticks, in fact the Forex doesn't close every day but at the end of the week, on Friday night. However, in high volatility conditions, gaps may also occur in the lower timeframes like 1m or 5m. In your case, it may be a temporary tracking error of your MT4 or, more likely, due to inaccuracy in providing quotes of your broker. ## Answer by James George (score 1) https://quant.stackexchange.com/a/50677 - It's clear the question is not about previous day close to next day open data and - Almost every chart in publications show this same discrepancy for intraday charts. It's likely there is data missing around, that does not get into charts when individual candles are generated. I have noticed that while charts are being updated with new data, no attempt is made to correct previous discrepancies; or data has imprecise time tags vs candle time starts and stops and it then is impossible to correct with data received after candle closure. It is useful to note and use `[close previous]/[open next]` price difference data. ## Answer by Giladbi (score -1) https://quant.stackexchange.com/a/37785 Usually the gap between the candle bars will be due to overnight price change which replicate a new information in the markets while they were closed for trading.
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