Big 6 Months Ahead, page-314

It was partially covered in my studies but not in massive detail.

It originated in mid 1930's. Known as Gartley's gap theory. Its stupid because he basically concluded 'it just happens' so if it statistically happens, it should be followed... The idea is that a gap is created due to the regular excess optimism or pessimism from investors (causing a gap in trading prices). That part I understand.

The justification of the gap needing to fill (rather than the price just retracing near the gap) is something I have always struggled with as while I understand investments overshooting in both directions on a regular basis, contradicting that markets are always efficient, there is nothing scnientific to say "the gap needs to fill".

However, this is the stock market, don't try to fight there herd I guess. A smart man always said "The market can remain irrational longer than you can remain solvent".