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RSI is relative strength index, which observes and says Over bought when RSI<70 and over sold when RSI <30.
A gap is a break between prices on a chart that occurs when the price of a stock makes a sharp move up or down with no trading occurring in between. Its created by either buying or selling pressure. An unmet consumer need where group of potential customers haven’t done any trading.
Gaps are used to interpret either support or resistance .
trading is a simple and disciplined approach to buying and shorting . Essentially one finds that have a price from the previous close and watches the first hour of trading to identify the trading range. Rising above that range signals a buy, and falling below it signals a short.
Gaps are named based upon the region where it occurs, either trendy or non trendy.
1. Area gap
2. Break out gap
3. Run away gap
4. Exhaustion gap.
Break out- Gap after a congestion, which occurs in the non trendy area. It’s not expected to fill if volume is high , its an sign of uptrend in market.
Exhaustion gap- Happens at the end of a trend on high volume. The gap is not followed by new highs or lows, and the gap may be unusually wide. After the gap, price consolidates or reverses direction. Commonly occurs after continuation gaps. Exhaustion gaps usually close within a week.
Runaway- Gap occurs during a straight-line advance or decline. Price makes new highs or lows without closing the gap. Volume is usually high.
consolidation – Occurs in a congestion, and closes quickly with in few days. on the day of gap volume is high.
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