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Gap analysis shows the strength and weakness of market through candlesticks.We buy when there is Breakout gap or Runaway gap and sell thereafter if the trend is broken down.
strength/lack of the market can be identified using GAP analysis
trend can be identified (whether its in beginning/middle/terminate stage)
use candlesticks for gap analysis than line chartsGaps are areas on a chart where the price of a stock moves sharply up or down, with little or no trading in between, it helps in interpreting the strength of the trend.
The GAP that occur at the end of a price pattern and signal the beginning of a new trend is a Breakaway gap.
The GAP that occur near the end of a price pattern and signal a final attempt to hit new highs or lows is a Exhaustion gap.
By rightly interpreting the gap formed on the chart we can determine the entry point to trade the stock and benefit out of it.
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