Gap is a area on charts where price of stock moves sharply up or down. Gap Up are generally bullish and Gap Down are bearish.
Four types of gaps are- area gap, breakout gap, runaway gap, exhaustion gap.
- : Gap is a area on charts where price of stock moves sharply up or down. Gap Up are generally bullish and Gap Down are bearish.
- : Gap is named based on its nature, whether in zone or out of zone. Types of GAP: 1. Area Gap 2. Break out GAP 3. Runaway GAP 4. Exhaustion GAP
- : GAPS appear on charts when there is a important event or news occurs which affects the security. Overnight risks occur when a news or event which affects the security occurs after closing of the market. It has gap impact on the price of security on the next trading day.
- : Area Gap occurs inside the trading range. It can be a result of commonly occurring events, such as low-volume trading days or after an announcement of a stock split. Area gaps often fill quickly, moving back to the pre-gap price range.
- : Breakout Gap occurs only when price breakouts from its trading range. The volume during the Gap day should be high. This gap may not be filled in near term. breakout gap is indication of new trend.
- : runaway gap is formed after breakout gap. It is a indication that the current trend will continue and even increasing. It occurs due to the increased participation of traders who have missed out the opportunity of trading during the breakout session. the area gap may not be filled in near term. the close should be at its days high during runaway gap. the volume is above average during the day.
- : This gap appears to be a runaway gap but if it gets filled on the same day then it is exhaustion gap. This gap forms at the end of trend & is a sign that trend is going to be reversed. the close should be at the days low. The volume should also be high to terminate the existing trend.