Gap Analysis – KNOWLEDGE CHECK

Types of GAP:
Area gap or trading gap
Break out Gap
Runaway Gap
Exhaustion Gap

TRADING GAP OR AREA GAP:
Any GAP appeared inside the trading area(buyers and sellers ) is called as AREA GAP.
The Area GAP is expected to be filled as both the buyers and sellers are present.
The volume is expected to be LOW during the typical trading gap day.
USAGE OF AREA GAP:
If area gap is not filled, breakout is going to happen.

BREAKOUT GAP:
Any gap appeared while giving break out is called as break out gap.
It generally happens at the beginning of the trend.
It is expected to remain open as the buyers are very powerful than sellers.
This is the beginning of new trend.
Volume is expected to be very high during break out day.
USAGE OF BREAKOUT GAP:
if BREAK OUT GAP GETS FILLED , WE SHOULD SELL,TREND IS ENDING.

RUNAWAY GAP:
Any gap appeared after a break out is called runaway gap.
Area above runaway gap is called runaway area.
This may not be filled because of sellers because buyers turned to sellers.
The runaway gap day should close at a price nearer to day s high price.
USAGE OF RUNAWAY GAP:
If runaway gap gets filled ,trending is getting ended.

EXHAUSTION GAP;
Any gap appears during day open got filled (disappeared ) in a same day or next day after a significant rally .
It is called a exhaustion gap.
USAGE OF EXHAUSTION GAP:
tREND IS TERMINATED
Waiting for new trend
Goes sideways.