gaps 1

Gaps in Trading

[vc_row][vc_column][vc_column_text]In this article I will introduce you to the different types of gaps that exist. What we will see can be applied to different markets: forex, stock exchange, crypto-currencies etc…. First, I will explain the meaning of the gaps and then we will see the gaps that can be identified – that is, the most common ones. 
A gap is simply a hole and these are visible if you have a graphic representation with Japanese candlesticks, bar charts etc… This is not visible if you are on a graphical representation with curves. Gaps appear on the charts mainly for two reasons: trading hours (market opening/closing) and announcements that shake up the market in a violent way. 
In the end, the gaps make it possible to interpret the psychology of the market. They can be used to detect a reversal, a continuation of a trend or to confirm a trend break. 
The four major gaps to know: 

  • – the common gap
  • – the breakaway gap
  • – the runaway/measuring gap
  • – the exhaustion gap

The common gap is generally filled quite quickly. It occurs in markets with no real trend or in a market in the process of “range”.

The gap of rupture is rarely filled. Indeed, this configuration indicates a strong change in trend. This may be related to a disturbing announcement, for example, or a break of a very solid resistance or a support that has been tested many times.

The runaway/measuring gap is also rarely filled. It usually appears at the beginning – middle of a trend.

The exhaustion gap is generally filled. It is formed at the tops and bottoms. 

In this regard, we have already written an article on this subject here:
I hope you have learned something new,
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