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What is a CME Gap and why do traders monitor it?
Have you heard about the “CME Gap” but don't know what it is? I'll explain it to you quickly.
The CME (Chicago Mercantile Exchange) where Bitcoin futures are traded from Monday to Friday, from 5:00 PM to 4:00 PM CT. The thing is, it closes on weekends, unlike crypto which operates 24/7.
When Bitcoin moves strongly over the weekend, on Monday when CME opens, there appears a “gap” between the closing price on Friday and what happened in the crypto market on Sunday. That untraded space on the chart is the CME Gap.
Why does it matter?
Historically, Bitcoin tends to “fill” these gaps — that is, the price revisits that area sooner or later. It's not magic, but it works quite often.
Example: If Bitcoin closes on Friday at $63K on CME and rises to $65K on Sunday, a gap of $2K upwards is formed. It is most likely that the price will drop to $63K to “fill” that gap.
So keep an eye on these gaps — they are not guaranteed, but they are price magnets.