It is not a directional indicator rather it indicates the strength in the market. it locates the phase of the trend and due to difference in the trading range it is visible. there are four types of gaps. Area,breakout,runaway and exahaustion gap.
- : gap analysis is not a directional indicator. we cannot use gap indicators to predict which way market will move but it certainly indicates the strength of the market. It locates the phase of the trend and it may be located due to the difference in trading range.
- : it depends upon the trend shown by the gap. Area Gap, Breakout gap, runaway gap and exhaustion gap
- : typically gaps appear due to difference in trading range.
- : It indicates the price range between yesterday and the trading day. gap appears in the non trading range. it generally indicates the negative breakout
- : it generally indicates the bullish break out area. characterised by the candlesticks moving out of the range with a good volume.
- : It indicates a bullish break out too, due to some global cues and the seller surrendering to buyer the price gives a further breakout indicating the pressure enforced by the buyers on sellers and sellers running away, which simply indicates the runaway gap.
- : Gap opened big like another gap whereas due to global cues the sellers dump the shares which result the share close below the level it opened. it may be visible unless one understands the candlestick patterns the gap indicated by dark colour which clearly indicates the stock opened at a higher price and closed at a much lower one.
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