gaps. definition gap up ………….high t < low t+1 or gap down…..…low t > high t+1
TRANSCRIPT
GAPS
DEFINITION
Gap UP ………….High t < Low t+1
OR
Gap DOWN…..…Low t > High t+1
GAPS
•COMMON GAPS
•BREAKAWAY GAPS
•RUNAWAY GAPS
•EXHAUSTION GAPS
COMMON GAPS
•OCCURS WHEN MARKET IS IN A TRADING RANGE
•RARELY SIGNIFIES ANY MAJOR CHANGE IN THE MKT.
•PRODUCT OF A SURPRISE
•GETS GENERALLY FILLED
BREAKAWAY GAPS
•USUALY OCCURS AFTER A CONSOLIDATION PHASE
•GAP WILL ACT AS SUPPORT AND RESISTANCE ONCE THE MARKET MOVES AWAY FROM IT
•WILL FUEL EVEN MORE AS TRADERS COVER THEIR SHORT/LONG POSITIONS
•IDEAL TO PLACE STOP OREDRS
RUNAWAY GAPS
•TRADERS WANT TO JUMP ONBOARD AND RIDE THE TREND
•VERY LITTLE OR NO PULLBACK TO ENTER THE TREND
•SEVERAL GAPS OCCUR
•PRICES ARE PUSHED UP/DOWN BY SHORT COVERERS
RUNAWAY GAPS
EXHAUSTION GAPS
•REPRESENTS END OF A STRONG TREND
•HIGH VOLUME + LARGE DIFERENCE BETWEEN PREVIOUS CLOSE AND CURRENT DAY'S OPEN
•HIGH VOLATILITY
•CLOSES LOWER THAN OPENING PRICE
EHHAUSTION GAP
TRADING THE GAP
RUNAWAY GAP
IF THERE IS A GAP UP AND THE CLOSE IS HIGHER THAN THE OPEN AND IS IN THE TOP HALF OF THE PRICE ENTER A LONG POSITION
IF THERE IS A GAP DOWN AND THE CLOSE IS LOWER THAN THE OPEN AND IS IN THE BOTTOM HALF OF THE PRICE ENTER A SHORT POSITION
EXHAUTION GAPS
MARKS THE END OF A TREND AND PROVIDES OPPORTUNITIES TO TRADE AGAINST THE TREND
SELL THE UPGAPS AT THE OPEN
BUY THE DOWNGAPS AT THE OPEN
EXIT ON THE CLOSE
USE A 5-POINT STOP LOSS
TRADES GAP OPEN CLOSE PROFITDIRECTION LOSS
1 UP 1440 1435 52 DOWN 1420,5 1428,7 8,23 UP 1447,8 144,5 3,34 UP 1464 1480,4 -55 UP 1485,5 1480,8 4,76 UP 1496,5 1466,88 29,627 DOWN 1451 1409,5 -58 UP 1473 1475 -59 UP 1477 1478 -5
10 DOWN 1464 1469,5 5,511 DOWN 1461,5 1472,5 1112 UP 1477,5 1457 20,513 UP 1466,5 1411,8 54,714 UP 1425,5 1409,8 15,715 UP 1442 1446,2 -516 UP 1375 1385 -517 UP 1399 1410,7 -518 DOWN 1364,5 1383,4 18,819 UP 1409,5 1459 -5
TOTAL POINTS = 137,02
DOUBLE TOPS
THE FAILURE RATE OF A DOUBLE TOP IS 65%, BUT WAITING FOR ACONFIRMATION CUTS IT TO JUST 17%
CONFIRMATION POINT
DOUBLE BOTOMS
IN A DOUBLE BOTTOM , BOTTOMS CLOSE TOGETHER PERFORMBETTER
BROADENING FORMATIONS
A PARTIAL DECLINE FROM A BROADENING TOP SIGNALS A UPWARDBREAKOUT 86% OF THE TIME
SYMMETRICAL TRIANGLES
PULLBACKS FROM SYMMETRICAL TRIANGLES ARE MORE LIKELYTO OCCUR AFTER A HIGH-VOLUME BREAKOUT
TRIPLE BOTTOMS
THE THIRD DOWN OF A TRIPLE BOTTOM PREDICTS PERFORMANCE.
WHEN THE 3RD LOW IS BELOW THE ABOVE BOTTOMIT IS MORE LIKELY TO OUTPERFORM
HEAD & SHOULDERS