The concept of Runaway Gap is applied on the company ‘ TATA STEEL Ltd’ during the period of August 2017, wherein there appears to be a Breakout Gap and later there is a Runaway Gap along the trending line which is an upward movement in the price of the stock. The following factors influence whether there is a formation of a Runaway Gap :
1. Post Breakout, the Runaway scenario takes place, and this appears inside the area.
2. The Area Gap may not be filled in the near term.
3. The close should be at it’s day’s high during the Runaway Gap.
4. The volume is distributed evenly during the day.
The above shown analysis in the chart represents a runaway gap appearing after a breakout gap during the above said period fulfilling the above mentioned conditions. Thus, the position to be adopted by the trader is long since the trend appears to be bullish with a Gapup. Also, the volume of stocks traded are high during the breakout gap, and there is average volume of stocks traded around the Runaway Gap.
