TCS – Exhaustion gap

Exhaustion gap observed after a bullish trend. Green candlestick with increasing volumes indicate trend reversal.

4 Comments

Suresh Surulimuthu 4 years ago

Dear Manoj,

It is a good spot but I doubt some points are missing.

Please review the conditions for exhausting gap again.
1) The gap appear after a trending zone seems to be a runaway gap, but, if it gets filled on the same day then it can be considered to be an exhaustion gap.
2) The close should be at its day’s low during the runaway gap.
3) The volume should be very high during the day to terminate the existing trend.
The exhaustion gap is difficult to spot because of the gap the filled. But it can be identified with the color of the candle.

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- Naresh 4 years ago
  
  Nice explanation sir
  
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  Manoj 4 years ago
  
  thanks for pointing out sir
  
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Naresh 4 years ago

Exhaustion gap occurs at the top or bottom with huge volume, chances are more that the market is exhausted and the existing trend is at pause. It is important to note that the exhaustion pattern should not be treated as a significant reversal.

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