Gap

Question 1

What is a gap

Answer 1

A gap is an area of discontinuity in a security’s price when no trading has occurred, can be a rise or a fall.

Question 2

When are gaps common

Answer 2

When there is news about a company out of trading hours - like and earnings call

Question 3

What are the 4 types of gap

Answer 3

Common Gaps
Breakaway Gaps
Runaway Gaps
Exhaustion Gaps

Question 4

What is partial gapping

Answer 4

This occurs when the opening price is higher than the previous close but within the previous day’s price range

Question 5

What is full gapping

Answer 5

When the opening price above the previous days close and anything else in the previous day’s price range

Question 6

What signals a common gap

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Answer 6

Gap preceeded usually by no major event and gets filled relatively quickly. They tend to be accompanied by normal average trading volume

Question 7

What signals a breakaway gap (can see more)

Answer 7

Occurs when the price gaps past a trading pattern, usually a support or resistance level but can also be for triangles, wedges and all the rest

Question 8

What is a runaway gap

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Answer 8

This happens when the trading activity skips sequential price points. So if theres a bullish trend that has a super strong section and skips a few points = runaway gap, no trading involved
signals an increase in trend intensity

Question 9

What is an exhaustion gap

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Answer 9

This is a break lower in prices, occurs after several weeks of rapid rise in price. Reflects a significant shift from buying to selling activity, usually cus of falling demand, signals upward trend may end soon

Question 10

Main difference between runaway and breakaway gaps

Answer 10

Breakaway = sharp rise in volume
Runaway = Not huge change in volume