Gap analysis

Gap is called the difference in trading range. It helps to locate the phrase of trend. To identify the strength of the trend .it is four types related to the area which formed.Area gap , breakout gap, run away gap, exhaustion gap.Gap is appear due to the overnight positive /negative news related to the company or global market. It appears due to differences in trading range. The open position of the day is differ with previous day trading range.Area gap appear inside the trading range. It may filled in near term. Volume should be low.Breakout gap appear only when the price give break out from its trade range. It may not be filled in near term. Volume should be high. It’s beginning of new trend. A gap that occurs after the rapid rise in a stock’s price begins to tail off. It seems to be run away gap but it closed on the same day or next day. An exhaustion gap usually reflects falling demand for a particular stock. Indicates major selling pressure. It’s difficult to spot because it looks like run away gap. Also we have familiar with candle sticks analysis to find it.