Gaps shows the strength of the trend. Gaps are named based on the area in which they appear, They are a strong indicator of trend .
There are for types of gaps
Area gap – appears in the trading zone and is expected to fill with less volume
Breakout gap – appears at the time of breakout from the trading zone and is not expected to fuill
Runaway gap – appears after the breakout, shows the panic of short sellers covering
Exhaustion gap – covers the gap the same day itself, shows a trend reversal due to buyers booing their profits
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Hi,
It’s all about one can understand something about the change in optimism or pessimism among investors. Thus, one can also predict whether stock prices are going to go up or down for the next few days. It’s everything shows you about the underlying market dynamics, the behavior of traders, and whether buyers or sellers are in control.