A gap occurs when the opening price is above or below the previous closing price, with no trading activity in between.GAP is named based on its location. It is named based on its nature, whether in zone or out of zone.
Four types of GAPS based on location of the GAP are 1. Area GAP 2. Breakout GAP 3. Runaway GAP 4. Exhaustion GAP .GAP does not forecast the positive or negative direction of the trend. Rather, it indicates whether the existing trend has strength or not. It helps us to locate current phase of the trend. It appears due to difference in trading range.
A gap generally is a non-traded zone which is impacted by global cues or global support.
BY GAP analysis we can find the strength of the trend
IT also helps us to locate the phase of the trend (i.e. the trend is in the initial /boom /end stage).

GAPS appear on charts when there is an important event or news occurs which affects the security. Overnight risks occur when a news or event which affects the security occurs after closing of the market. It has gap impact on the price of security on the next trading day.

  • : A gap occurs when the opening price is above or below the previous closing price, with no trading activity in between.
  • : GAP is named based on its location. It is named based on its nature, whether in zone or out of zone. Four types of GAPS based on location of the GAP are 1. Area GAP – In non-trending zone. 2. Breakout GAP – It appears only when price give breakout from its trading range. 3. Runaway GAP – In trending area. 4. Exhaustion GAP – Filling of a formed GAP in that particular day or the day after (so reversal of color) in trending zone with high volume.
  • : GAP does not forecast the positive or negative direction of the trend. Rather, it indicates whether the existing trend has strength or not. It helps us to locate current phase of the trend. It appears due to difference in trading range. A gap generally is a non-traded zone which is impacted by global cues or global support. BY GAP analysis we can find the strength of the trend IT also helps us to locate the phase of the trend (i.e. the trend is in the initial /boom /end stage). GAPS appear on charts when there is an important event or news occurs which affects the security. Overnight risks occur when a news or event which affects the security occurs after closing of the market. It has gap impact on the price of security on the next trading day.
  • : An area gap is also known as pattern gap, or temporary gap, tend to occur when trading is bound between support and resistance level on a short span of time and market price is moving sideways. One can also see them in price congestion area. Usually, the price moves back or goes up in order to fill the gaps in the coming days. If the gap is filled, they offer little forecasting significance.
  • : A breakaway gap occurs when the price gaps above resistance or gaps below support. Support or resistance, in this case, is often associated with a chart pattern, such as a trading range, triangle, wedge, or other patterns. Breakaway gaps are also typically associated with confirming a new trend. A breakaway gap with larger than average volume, or especially high volume, shows strong conviction in the gap direction. A volume increase on a breakout gap helps confirm that the price is likely to continue in the breakout direction. If the volume is low on a breakaway gap there is a greater chance of failure.
  • : A runaway gap is when the price opens significantly higher than the prior close in an established uptrend. During a downtrend, a runaway gap is when the price opens significantly lower than the prior close. A runaway gap doesn't need to breach a major support or resistance level (like a breakaway gap) but it must occur in the current trend direction. The psychology behind a runway gap is that traders, who did not get in during the initial move, get tired of waiting for a retracement, to join what they perceive to be a trending market, and jump in en masse.
  • : A Gap is a major visible discontinuity between two price bars on a chart. Exhaustion gaps occur at the end of a trend, signaling that the party’s over. An exhaustion gap is usually followed by a reversal. This gap is filled around a week. Exhaustion gaps imply that buyers are used up or exhausted and don't have enough orders to overwhelm the significant number of new sellers that seem to have entered into the market.
2 Comments
  1. Maruti Patil 2 years ago

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