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.
Venkatasubramaniam Narasimhan, , Gap Analysis, Area GAP, gap indicators, Run away Gap and Exhaustion gap., Runaway Gap
Hi,
In response to your question
Your Question 1:: Explain the importance of overnight risk?
Overnight risk refers to the risk of what happens to the markets while you’re sleeping or while the exchanges are closed and you’re not able to exit your positions. During this time, your money is exposed, and if you’re trading on margin, you’re exposed to a margin call.