The concept of the Breakout Gap has been applied on the company ‘Dabur India Ltd’ during the period from the last week of October 2017 to the the first week of November 2017, wherein a bullish breakout is observed supported by a good volume of stocks traded during the breakout day. The fulfillment of the following conditions are required for the formation to qualify as a Breakout Gap :
1. The Breakout Gap appears only when the price gives a breakout from it’s trading range.
2. The area gap may not be filled in the near term.
3. The volume during the Gap day should be high.
Therefore, it is noticed that on the 1st of November 2017, a breakout from the existing range of trade has happened with a high volume of stocks traded on that day as indicated on the chart. Therefore, it can be concluded that the shape has taken place during the period. Since the breakout is bullish, the position to be adopted by the trader is long, and hence the trader has to buy the stock. It can also be observed that the gap has been filled later on the 15th of November 2017.
