Day 8

There are four types of gaps: common, breakaway, runaway, and exhaustion, as well as a gap pattern called an island reversal. Common Gaps. Common gaps provide no significant analytical insight, and are regular occurrences. Breakaway Gaps. Assets prices move in ranges or trends. Runaway Gaps. Exhaustion Gaps
A gap is defined as a price level on a chart where no trading occurred. When you are looking at gaps on a stock chart, the most important thing that you has already occurred, these are amateurs buying the stock – look to short. The advantage is that you can sometimes make big profits, quickly, and with a little less risk
1) Area gap will appear inside the trading range. 2) Area gap may be field in near term. 3) The volume during the gap day is generally low.
Breakout gap: When the price moves up from the trading range and gives a breakout with a gap with a high volume. This gap may not be filled. Runaway gap: When the price breakout from the trading range, the sellers are forced to buy back hence increasing the demand. The gap may not be filled
A runaway gap is a gap of 5% or more that occurs in the direction of a trending price. It is characterized as a runaway gap because of the timing of its occurrence. It is also typically associated with high volume trading supporting the gap. The image shows a gap in the middle of a large upward movement.
Exhaustion Gaps. Exhaustion gaps are those that happen near the end of a good up- or downtrend. They are many times the first signal of the end of that move. They are identified by high volume and a large price difference between the previous day’s close and the new opening price.