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Gap Up & Gap Down
A gap is essentially a change in prices levels between the close and the open of two consecutive days. Gap analysis requires confirmation that is only available after the price movement actually manifests itself. For example, there are different types of gaps like Breakaway Gap, Runaway Gap, Exhaustion Gap and Island Reversal.
- “Breakaway Gap”:Breakaway gaps are the gaps that occur at the end of the share’s price patent. Break aways either indicate a Gap Up or a Gap Down. Either ways, they indicate a new trend or the beginning of a new direction.
- “Runaway Gap”: A runaway gap is a type of gap on a price chart that occurs during strong bull or bear movements. It is characterized by a significant change in price in the direction of a trend. During a trend, a security’s price may show several runaway gaps which can help to reinforce the trend’s direction.
- “Exhaustion Gap”: Exhaustion gap represents the opposite end of the trend compared to the breakaway gap. Exhastion Gap represents the final leg of a price pattern and is an indicator of a final attempt to reach the new high or lows in pricing. This is used to indicate reversals of a trend.
- “Island Reversal”: An island reversal is short-term reversal pattern that forms with two overlapping gaps.Traders with positions taken between the two gaps are stuck with losing positions. A bullish island reversal forms with a gap down, short consolidation and gap up. A bearish island reversal forms with a gap up, short consolidation and gap down.
Previous Breakaway Gap support in GRAPHITE (Daily Chart)
Looks Good Above: 331
Can be: 366, 387 & 407
Looks Weak Below: 331
Can be: 311, 290 & 270
Used Retracement to draw level.
Auto Inverted Head and Shoulder Pattern In DABUR (Daily Chart).
Looks Good Above: 405
Can be: 420, 438 & 455
Looks weak below: 394
Used Retracement to draw level.
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