[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: https://medium.com/cryptoaddicts/the-impact-of-bitcoin-cme-futures-67c946eb29a2
I hope you have learned something new,
Sources for images: https://en.wikipedia.org/wiki/Gap__(chart_pattern)
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