Gaps

Gaps occur because

• Good / bad earning announcements that are different to market expectations
• News / Geopolitical events
• Overall market sentiment
• Order imbalances - big buy/sell orders
• Rumours - company partering with another company, leaked info

 

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Types of gaps

 

Common gaps

• Appears in a weak or calm market
• No reason or catlyst to the gap
• Often filled quickly

 

 

Breakaway gaps

• Price suddenly breaks a structure (support or resistance)
• Usually confirms a breakout

 

 

 

Runaway gaps

• Appears when the market is gaining or falling qucikly
• Signals buyers or sellers dominant
• High probability of continuation
• Usually not filled