Charts are full of three-candle gaps. If you treated every one as meaningful, you would be overwhelmed. Grading them helps you decide which, if any, are worth a place in your plan. Treat these as ideas to test, not facts.
Size relative to normal movement
A tiny gap in a quiet market is usually noise. A gap that is large compared with recent average candle size reflects an unusually strong move. A simple measure is the gap's height divided by the average true range (ATR) of recent candles.
Context
- Did it come with a break of structure? A gap created by a decisive move through a swing point has more significance than one inside a range.
- Does it align with the higher-timeframe direction? A bullish gap in a higher-timeframe uptrend is more consistent than one against it.
Timeframe
Gaps on higher timeframes cover wider ranges and typically matter more than gaps on one-minute charts, where spreads and noise dominate.
Has it been revisited?
A gap price has already returned to and passed through is often called mitigated or filled, and is less interesting than an untouched one. Decide how you will treat partially filled gaps and write that rule down.
Where gaps are least useful
Inside choppy ranges and around major news, where sharp spikes create gaps with no real structure behind them.