Gap analysis is very important for technical analysis. It represents the strength of the market. There are four types- area,breakout, runaway and exhaustion.
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Hi sir,
The upcoming answer will be appropriate for exhaustion gap.
Make sure You give brief answers so that it will be very useful to recall.
Exhaustion Gap:
1. The Gap is created at the start of the day i.e. starting price is much higher than the previous day’s highest price but gets filled by end of the day with Red body.
2. Exhaustion gap appears after a significant rally i.e. similar to the runaway gap but it closes with different body
3. volume should be very high to change the trend.
Difficult to spot – Since it starts as a runway gap but later ends as a exhaustion gap, the exhaustion gap is difficult to spot.
Thank you. Point noted