marym
Active member
In the stock market, a gap is a price difference between the closing price of a stock on one trading day and the opening price of the stock on the next trading day. The price difference creates a gap on the price chart, which can provide valuable information to traders.
There are three main types of gaps in the stock market:
There are three main types of gaps in the stock market:
- Common gap: This type of gap occurs frequently and usually doesn't indicate a significant change in the market trend. Common gaps are usually filled relatively quickly.
- Breakaway gap: A breakaway gap occurs when the stock price breaks out of a trading range or pattern. This type of gap can indicate a significant change in market trend and can take longer to fill.
- Exhaustion gap: An exhaustion gap occurs when the stock price has been trending in a particular direction for an extended period and the gap occurs at the end of the trend. This type of gap can indicate a trend reversal and can take longer to fill.