Gap (chart pattern): Difference between revisions

Revision as of 09:36, 13 November 2010

Revision as of 02:38, 18 January 2011

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For example, the price of a share reaches a high of $30.00 on Wednesday, and opens at $36.00 on Thursday, falls down to $35.00 in the early hour, moves straight up again to $37.00, and no trading occurs in between $30.00 and $35.00 area. This no-trading zone appears on the chart as a ''gap''.

According to the weak form of the [[efficient markets hypothesis]] such patterns have no predictive value, as stock prices follow a [[random walk]].

Gaps can play an important role when spotted before the beginning of a move.

==Types of Gaps==