Friday, March 21, 2014 7:26:25 PM
A gap is defined as a price level on a chart where no trading occurred.
Filling the gap
Sometimes you will hear us traders say that a stock is "filling a gap" or that gap will need to be filled.
Sometimes you hear traders saying that "gaps always get filled". This just simply isn't true. Some gaps never get filled,!
*Exhaustion Gaps - This type of gap occurs in the direction of the current trend and represents the final surge of buying or selling interest before a major trend change - Many Penny Stocks on anticipation of News or event.
*Breakaway Gaps - This type usually occurs after a consolidation or some other price pattern. A stock will be trading sideways and then all of sudden it will "gap away" from the price pattern - these tend sometimes filled also.
*Continuation Gaps or runaway gaps occur during a strong advance in price or a breaking news story or event - continuation GAPS tend not to get filled as its not related to exhaustion or sudden movement after a sluggish period as in breakaway gaps. because something significant occurred with the company to warrant such FLUCTUATION IN PRICE MOVEMENT - AS WITH FROZ / APT
Hope this helps
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