Gap down: does the stock keep falling?
A gap down is when a stock’s whole day trades below the previous day’s low. Sellers, often reacting to news or results, would not wait for yesterday’s prices.
When “Gap down” appeared, NIFTY 200 stocks were lower 12 trading days later 43.3% of the time, against 44.7% after any day: about the same as picking a random day.
| After | Higher | Average move | Median move | Higher after any day |
|---|---|---|---|---|
| 5 trading days | 53.2% | +0.5% | +0.3% | 53.9% |
| 12 trading days | 56.7% | +1.4% | +1.0% | 55.3% |
| 20 trading days | 56.8% | +1.9% | +1.2% | 56.8% |
Year by year
| Year | Signals | Higher after 12 days | Any day |
|---|---|---|---|
| 2021 | 191 | 72.8% | 54.4% |
| 2022 | 684 | 50.0% | 52.1% |
| 2023 | 347 | 51.6% | 61.3% |
| 2024 | 369 | 56.4% | 53.7% |
| 2025 | 306 | 67.6% | 53.1% |
| Large cap only | 1086 | 58.5% | |
| Mid cap only | 811 | 54.3% |
What it is
A gap down is when a stock’s whole day trades below the previous day’s low. Sellers, often reacting to news or results, would not wait for yesterday’s prices.
How we detected it
The day’s high is below the previous day’s low. Any size of gap counts, and there is no trend or volume check. We count the day of the gap.
How traders read it
A gap down on bad news can keep falling, but many gaps are partly filled as the panic settles. Traders watch whether price can climb back into the gap.
A signal is a probability, not a promise
Even the most reliable signal in this study was followed by the opposite move 37% of the time. A signal tilts the odds; it doesn’t decide the outcome.
Signals work better when they agree with the trend and with each other. Whatever the signal, decide your stop-loss before you act.
Practise spotting it, free
The Morning and evening star chapter teaches this signal in five minutes, then you call real NSE charts and get graded on your reasoning.
Common questions
Does the gap down signal work on Indian stocks?
When “Gap down” appeared, NIFTY 200 stocks were lower 12 trading days later 43.3% of the time, against 44.7% after any day: about the same as picking a random day. No single signal is reliable on its own; traders combine it with the trend and manage risk with a stop-loss.
How often did stocks rise after this signal?
Across 1,897 signals on 179 NIFTY 200 stocks (2021–2025), the price was higher after 5, 12 and 20 trading days 53.2%, 56.7%, 56.8% of the time. After any day it was 53.9%, 55.3%, 56.8%.
How is “Gap down” defined here?
The day’s high is below the previous day’s low. Any size of gap counts, and there is no trend or volume check. We count the day of the gap.
How these numbers were made
We ran the same signal detector MarketSeekho uses to grade players over every trading day of 187 NIFTY 200 stocks, Jan 2021 to Oct 2025, using NSE end-of-day prices (1,54,833 stock-days). We counted the first day a signal appeared, then ignored the same signal on the same stock for 12 trading days so results don’t overlap. Windows with splits, bonuses or trading halts were left out.
“Any day” is the baseline: the same measure after every day in the data, signal or not. It matters because 2021–2025 was mostly a rising market, so stocks were higher after 12 days more often than not anyway. Past results don’t predict future ones, and this is not investment advice.