The rising window, or simply a gap, represents a bullish price pattern. It occurs when the price opens significantly higher than the previous day’s close, leaving a gap on the chart. Investors interpret this gap as a support level, and it is the lower bound of the window that is particularly important.

Imagine a stock that closes on Day 1 at $50 but then opens on Day 2 at $52 which is higher than the previous day’s close of $50. This gap between the close of the previous day and the open of the current day forms the rising window pattern. Investors may view the area between $50.00 and $52.00 as a support level.

If the price retraces back to the $50.00 level, investors who faded the gap (sellers trading against the upward price movement) might take profits, and fresh buyers could use that area to now initiate new long positions. However, if the price breaks below $50.00 and closes the gap, it could indicate a potential reversal or change in market dynamics.

As with the falling window, technical analysis is subjective, and investors often use rising windows in conjunction with other tools and strategies to make informed decisions. The rising window pattern is seen as a bullish signal, but it is important to consider other factors and indicators to confirm the overall market sentiment. Take a look at an example of a rising window that occurred in Nvidia stock surrounding optimism about the company’s future earnings.