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A GAP in technical analysis is the gap or difference in price between previous closing price and present day opening price. To spectate the gap, candle stick chart is ideal.
Gap Technical analysis is the process of predicting trend strength using the price gaps forming after everyday closure.
In a daily candle stick pattern when there is a significant difference between the close of the previous day and the open of the next day, the difference is termed as a gap. Gaps are differentiated based on if they occur in a trending or a non trending pattern and also if it is filled or not.
Consolidation gap occurs in a non trending pattern and is expected to be covered shortly and is of no significance. If gap is not broken and leaves the trading area then a corresponding new trend is expected to form.
Breakout Gap occurs after a non trending pattern and a huge gap is formed outside the trading area with significant volume and the gap is not filled then this trend is expected to continue.
Runaway Gap occurs after a breakout and a huge gap is formed with significant volume and the gap is not filled then the trend is expected to carry on
Exhaustion Gap occurs after a runaway gap and the gap is covered on the same day with high volume then a trend reversal can be expected. The day closes near the day’s low.
The difference in price of previous day close and next day opening is called gap in technical analysis . It is seen in candlestick charts
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