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Oops!

Price action · Beginner · Daily bars · Popularized by Larry Williams

Price gaps below yesterday's low, then trades back up through it — buy the reclaim.

The open surprises everyone — then price snaps back through yesterday's range. You're not catching a falling knife; you're waiting for proof that the gap failed.

How to trade it (bullish)

  1. Setup: Market opens below yesterday's low — a gap that catches late sellers off guard.
  2. Entry: Place a buy stop at yesterday's low. It only fills if price climbs back through that level.
  3. Stop and exit: Stop below today's low (the post-gap washout). Exit on the close or at your target.

How to trade it (bearish)

  1. Setup: Market opens above yesterday's high — a gap that catches late buyers off guard.
  2. Entry: Place a sell stop at yesterday's high. It only fills if price drops back through that level.
  3. Stop and exit: Stop above today's high (the post-gap spike). Exit on the close or at your target.

Why it works

A gap-down open is an emotional event — overnight news, fear, forced selling. Traders who sold or shorted the gap did so at an extreme. When price climbs back above the prior low, that emotional move is invalidated and those late sellers are now offside; their stop-losses and short-covering become fuel for the reversal. You're not guessing a bottom — you require proof (the reclaim) before entering.

Watch out for

On strong trend/news days the gap keeps going and never reclaims — the buy-stop simply never fills. Filter for a minimum gap size so noise doesn't trigger it.

Pairs well with

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Popular markets for this pattern: Gold, Crude Oil, EUR/USD, Corn, Wheat, Coffee, Cotton, Lumber, Natural Gas, USD/CHF, USD/CAD, IWM