PORUR KARTHICK-GAP ANALYSIS

GAP analysis is mainly used to identify the strength of trend. This is part of technical analysis study.When Open price of the candle is higher than close price of previous candle for bullish, and the same vice versa for bearish candle. When there is unexpected positive or negative news, Gap appear in charts. Carry forwarding position next day will always have risk of Gap opening.This Gap appear during consolidation period. This Area Gap will be filled in short span of time. However, area gap with high volume should be watched for trading opportunities. Volume is normally low during this area Gap.Break up gap will happen during break of support/resistance. Volume will be high during this break out. It clearly indicates strength of trend.Runaway Gap is happening after break out Gap. This is mostly because of seller’s urge to cover the short position. This scenario will fuel the strength of trend tremendously. Volume will be high during this period.Exhaustion Gap is nothing a Gap which is getting auto filled on same day with high volume. Normally, it indicates reversal of trend.