Yet, important events may happen during the time the market is standing still. As you know, the Forex market is not very active on Saturday and Sunday, so the main currency trading ends on Friday and starts on Sunday night with the beginning of the Asia-Pacific trading session. Weekend gapsĪ specific type of gaps takes place after weekends. By this term, we mean gaps that can’t be placed in a price pattern and simply represent an area where the price has gapped. Besides, try to find the continuation gaps in the chart, those we’ve discussed above.īesides the types of gaps mentioned above, it’s also possible to see common gaps. After the last jump, there was no one to support the continuation of an uptrend, and the stock reversed down. On the chart of Facebook, you can notice exhaustion gaps. To make the right distinction between these two types of gaps, have a look at the size of candlesticks: if a currency pair is very volatile, candlesticks on the chart are big and the price made several jerking moves, it might be an exhaustion gap. It’s possible to take an exhaustion gap for a continuation one. As a result, an exhaustion gap is followed by a reversal in price action. During these time, the last portion of market players joins the trend and there will be no one to support this trend after that. You can observe the example of the continuation gap in the chart of Apple below.Įxhaustion gaps take place near the end of a price pattern and signal a final attempt to hit new highs or lows. If a trend is bearish and a bearish gap is formed, it’s bearish continuation gap. In other words, if you see a bullish gap during an uptrend, then you have a bullish continuation gap in the price chart. Tip: breakaway gaps often occur after important news or economic releases.Ĭontinuation gaps happen in the middle of a price pattern and signal a rush of buyers or sellers who think that the price will continue going in the same direction. That jump was caused by the news that S&P Dow Jones Indices would add Tesla to the S&P 500. Here is the example of the breakaway gap on the chart of Tesla. Their other advantage is that by spotting ing such gap a trader can join a new trend at the earliest stage. It’s easy to spot breakaway gaps on the chart. The price suddenly gaps through the tested level and then starts a new trend in the direction of the breakout. Such gaps appear when the price is testing a level on the chart – support, resistance, trend line, trend channel etc.
![fill the gap stocks fill the gap stocks](https://i.ytimg.com/vi/vHZs1LawKNA/maxresdefault.jpg)
Breakaway gapsīreakaway gaps occur at the end of a price pattern and signal the beginning of a new trend. In Japanese technical analysis gaps are referred to as “windows”.
![fill the gap stocks fill the gap stocks](https://s3-ap-southeast-1.amazonaws.com/stateofthemarket/2017/Nov+2017/03Nov2017/baba1.jpg)
At some point, the price which was at the closing of a candlestick is no more interesting for traders and the new price of the following candlestick better represents the value of an asset (a currency pair). This may happen if the market’s view of the price rapidly changes and there’s a sudden influx of buy/sell orders. Gaps occur when the following candlestick opens at a distance from the previous candlestick closing price. A gap is an empty space within a price chart between the two neighboring candlesticks.