There is an old saying that the market hates vacuum and all the gaps will be filled. While this may have some benefits for common and exhausting gaps, open positions waiting to fill a breakthrough or runaway gap can ruin your portfolio. Similarly, waiting for the price to fill the gap to enter the trend may cause you to miss major moves.
However, the gap between the price line is a major technological development and visualization in the analysis should not be ignored. Japanese candlestick analysis is full of patterns that rely on gaps to achieve goals.
There are usually gaps in price charts, called gaps, which indicate the time when there is no stock trading within a certain price range. Usually, this happens between the closing price of one day and the opening price of the next day. There are two main types of disparity: rising disparity and falling disparity.
In order to form an upward gap, the low price after the close must be higher than the high price the day before. The upside gap is generally considered bullish.forex trading signals
The downward gap is the opposite of the upward gap. The high price after the close must be lower than the low price of the previous day. The gap is generally considered bearish.
Closing offer price is due to abnormal strong trading interest generated when the market is closed generated. For example, if an abnormally high earnings report is issued after the market is closed that day, then a large amount of buying interest will be generated overnight, which will lead to an imbalance between supply and demand. When the market opened the next morning, the stock price rose due to increased demand from buyers. If the stock price stays above the previous day's high throughout the day, then an upward gap will be formed.
The gap can provide evidence that this market movement along with the person fundamentals or psychological group of important changes have taken place.
Timeline of the gap
The upper and lower gaps can be formed on the daily, weekly or monthly charts, and when there is an above-average chart, the gap is considered significant.
Gaps appear more frequently on the daily chart, and every day there is an opportunity to create a vacancy. Gaps on weekly or monthly charts are quite rare: between the closing price on Friday and the closing price on Monday on the weekly chart, and between the closing price on the last day of the closing price on the monthly chart and the closing price on the first day of the next month There must be a gap.https://www.freeforex-signals.com/
Almost every day the price spread charts are trading very weak Typically securities, should be avoided. Prices usually fluctuate up and down at the opening of the market, but this gap does not last until the market closes. This temporary intraday gap should not be considered as having greater significance than normal market fluctuations.
Type of gap
The gap can be divided into four basic categories: " general " , " out " , " out of control " and " exhausted " .
There when the transaction is called a notch or gap area, a common gap usually flat. In fact, this may be caused by the ex-dividend of the stock when the trading volume is low. These gaps are common (understand?) and are usually filled quickly. " Fill up vacancies " refers to the price of live action at a later time (days to weeks) are usually back at least to the last day before the gap. This is also called closing the gap. This is a chart of two common gaps that have been filled. Note how, after the gap, the price drops to at least the starting point of the gap; this is called shrinking or filling the gap.