GAP ANALYSIS

*Gap appears due to difference in trading range.
*The empty space between previous trading period and current trading period is said to be gap.
*Gap indicates strength of trend.It helps to locate phase of trend.*There are 4 types of gaps
1.Area/consolidation gap
2.Breakout gap
3.Runaway gap
4.Exhaustion gap*
Characteristics of Area gap*
*The gap appears at non trending area(between demand & supply).
*Volume is low.
*Gap gets filled easily.
*Characteristics of breakout gap*
*The gap appears when price breaks out from its trading range.
*Volume is very high.
*Gap will not be filled and shows the forward trend.
*Characteristics of runaway gap*
*The gap appears on trending area after breakout point.
*significant volume.
*Gap is expected not to be filled.
*Characteristics of Exhaustion gap*
*High volume
*Gap gets filled in the same day.
*Exhaustion gap is created when current opening is much higher than previous day but gets filled during the same day and no gap is seen at the end(EOD).so it is difficult to spot.
*When opening price is much higher than closing price of previous day ,gap appear in chart.
*Overnight risk occurs mainly due to important announcement of news, events and any results and positive news of the company after closing the market.All of sudden share prices increases to great extent.