gap analysis indicates the strength and weakness of the price. the gap is nothing but yesterday and today’s price gap. naturally market closes(yesterday) and opens(toady) not the same price here its called gap. four types of gap analysis.
Area gap : the area gap should appears in non trending area between demand and supply zone. gap may be fill in near terms. here volume expects low.
breakout gap : its a beginning of new trend. it appears in trending area. the price movements from non trending to trending area with higher volume. the gap appears its a breakout gap.
Runaway gap : after a breakout gap a significant volume a runaway gap appears. it shows the aggression of the buyers. seller run away from the market trend.
exhaustion gap : the termination of the buyers. its appears like runaway gap but the price open high and ends lower than the previous one. the gap fully covered by the previous one. so here gap not appeared. here the volume is expecting high.
gap analysis
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H
Hi,
Gaps occur when the market opens away from the closing price of the previous session. It happens because while the market is closed, it continues to discount new material information. Company earnings is a classic example.
ok naresh thank you.