Gap Analysis used to identify the strength of the market. Dow Theory, Price Patterns, Candlestick Analysis etc. may not give the required directional movements. The strength of these analysis can be identified by using Gap Analysis. Gap indicates the strength of the trend and appears due to difference in trading range. There 4 types of gaps: Area Gap, Breakout Gap, Runaway Gap and Exhaustion Gap. If we can spot these Gaps 90% of the job is done. Since Line Charts may not show any gaps, we should spot the Gaps in price charts only by using Candlestick Gaps.
Qualify the recent price action as Trending or Non Trending area. The characteristics of above 4 gaps discussed herein above.

1 Comment
  1. Naresh 5 years ago

    Hi,
    Your work is good

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