Gap (chart pattern): Difference between revisions

Revision as of 14:18, 28 January 2011

Revision as of 20:24, 10 July 2011

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* '''Common gap''' : It is also known as ''area gap'', ''pattern gap'' or ''temporary gap''. They 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, then they offer, not much in the way of forecasting significance.

* '''Exhaustion gap''' signals end of a move. These gaps are associated with a rapid, straight-line advance or decline. A reversal day can easily help to differentiate between the Measuring gap and the Exhaustion gap. When theyit areis formed at the top with heavy volume, there areis significant chanceschance that the market is exhausted and reversalprevailing trend is ahead.at Ahalt reversalwhich dayis canordinarily easilyfollowed differentiateby betweensome theother Measuringarea gappattern anddevelopment. theAn Exhaustion gap should not be read as a major reversal.

* '''Measuring Gap''' : Also known as Runaway Gap, a Measuring gap is formed usually in the half way of a [[price]] move. It is not associated with the congestion area, it is more likely to occur approximately in the middle of rapid advance or decline. It can be used to measure how much further ahead a move will go.