Gaps are areas on a chart where the price of a stock (or another financial instrument) moves sharply up or down, with little or no trading in between. As a result, the asset’s chart shows a gap in the normal price pattern. The enterprising trader can interpret and exploit these gaps for profit.

  • : A gap is an area discontinuity in a security's chart where its price either rises or falls from the previous day's close with no trading occurring in between. Gaps are common when news causes market fundamentals to change during hours when markets are typically closed, for instance an earnings call after-hours.
  • : The GAP is formed when there is a large-enough difference in the opening price with reference to the closing price of the previous day Area gap – will appear inside the trading range(Non trending area) . It may be filled in near term. If gap not filled which indicates the weakness of counter party. The volume during the Gap day is generally low. Breakout gap – will appear only when price give breakout from its trading range. Area Gap may not be filled in near term. The volume during the gap day should be high. Runaway gap – Post breakout, the runaway scenario take place, its indicated the sellers buy back the shares. This gap appear inside the trending zone, it may not be filled in near term. The close should be at its day’s high during Runaway gap. The volume is distributed evenly during the day. Exhaustion gap – The gap appear after the trending zone seems to be a Runaway gap but if it get filled on a same Day then it can be considered to be Exhaustion gap. The close should be at day’s low during runaway gap. The volume should be very high during the day to terminate the existing trend
  • : On a technical analysis chart, a gap represents an area where no trading takes place means a market gap is the difference between the closing price of one period and the opening price of the next period. Market gaps are most often created between trading sessions, such as during the night or over the weekend. A simple example would be a company surprisingly announcing its bankruptcy on a Saturday – traders would panic, and the opening price on the Monday could open below the closing price on the Friday. The gap does not necessarily occur during the overnight period when markets are usually closed – it can also happen between on a shorter time frame fuelled by fundamental changes, natural disasters, political turmoil, acts of terrorism or high impact of news event etc.
  • : Area GAP always appears in non-trending zone, range bound or sideways movement It takes place when selling pressure exists in that particular area. This GAP is most likely to get filled in the near term. The volume during the gap day is generally low or average.
  • : List the conditions: when the price moves up, a gap appeared while moving out of range with high volume is a breakout gap.this is the start of a new bullish trend
  • : RUNAWAY GAP The GAP, that forms AT THE TRENDING AREA of the stock. Here, the gap may not be filled in near term, close should be at its day’s high and Volume is distributed evenly during the day. This is the BOOSTING phase of the existing BULLISH/BEARISH trend Behavior:- A runaway gap occurs near the middle of an identify trend and used to signal an increase in the trends intensity.
  • : a) The gap appears after a trending zone, opened at top at the time there is a gap and the same day got filled is called Exhaustion gap. (b) The close should be at its day’s LOW during Runaway gap. (c) The volume should be very high during the day to terminate the existing trend. It is difficult to identify analysing chart; the gap may not be visible easily. If you understand the characteristics of candlesticks, you can identify the exhaustion gap.
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