GAP analysis is useful to indicates the strength of trend in the market.
It helps to locate the phrase of trend.
GAP Analysis is classified into four types are:
1. Area gap.
2. Breakout gap.
3. Runaway gap.
4. Exhaustion gap.

  • In price charts there is blank spaces in the price movements called as GAP. It indicates the strength of bullish and bearish trends in the market.

  • Four types of GAP are:
    1. Area gap.
    2. Breakout gap.
    3. Runaway gap.
    4. Exhaustion gap.

  • Gaps appears on the charts when there is an important information or events creates a gap. It affects the next day trade in the market.

  • Area gap occurs in the trading range, but there is a gap between the previous price and current price because of low volume trading or stock split. It is also called as common gap.

  • This breakout gap occurs in the previous price trading breakout. The volume creates high during the gap.

  • The Runaway gap is formed after the breakout gap. The volume creates high during run away gap. This gap indicates the strong position to trade in the market.

  • The Exhaustion gap is an reversal trend in the market. This gap occurs in the end of price trend on the high volume.

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