Stock Terms: What Is A Gap Gap?

The gap of high jump is not necessarily compensated, because the general trend of any country's stock market index is upward. Therefore, the breakthrough gap formed at a lower position can not be supplementation.

But the gap of low jump will be supplemented, including physical compensation and island type compensation.

What is a gap gap?

Key points of gap analysis

1. type analysis

Gap means

The gap is divided into four categories: ordinary gap, breakthrough gap, continuity gap and consumptive gap.

The size of the gap can predict the strength of the trend, whether it is a breakthrough or the end of the trend. It is the most powerful auxiliary material for judging various forms.

This is described below.

(1) ordinary

Such gaps usually occur in intensive trading areas, so many of the collation or steering patterns that need to be formed for a long time, such as triangles and moments, may have such gaps.

(2) breach of the gap

Breaking through the gap is a gap created when a dense reversal or consolidation is completed.

When stock prices jump away from a large gap, this means that a real breakthrough has already taken place.

Because erroneous movements rarely produce gaps, and gaps can show the strength of breakthroughs. The bigger the gap, the stronger the future.

(3) continuity gap

There may be a continuous gap on the way up or down.

Such a gap will not be confused with the breakthrough gap. Most of the gaps arising from the rapid rise or fall of the type or intensive trading area are continuous gaps.

This gap can help us estimate the amplitude of future market volatility, so it is also called measurement gap.

(4) consumption gap

Like the continuing gap, the consumption gap is accompanied by rapid and large share price volatility.

In the rapid rise or fall, the fluctuation of stock prices is not a gradual resistance, but more and more urgent.

At this time, the price jump (or jump drop) may occur, this gap is the consumption gap.

Usually, the consumption gap is mostly in the last stage of panic selling or consumptive rise.

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2. market implications

(1) the ordinary gap has no special analytical significance. It will be completely filled in a few trading days. It can only help us identify clearly the formation of a certain type.

The ordinary gap is much more likely to be reorganized than when it occurs in reverse form. Therefore, when we find that there are many gaps in the developing triangle and rectangle, we should enhance the belief that it is a sort of form.

(2) the analysis of breaking through gaps is of great significance and often occurs in important steering patterns such as head and shoulder breakthroughs. This gap can help us identify the authenticity of breaking signals.

If the stock price breaks through the support line or resistance line and jumps off with a large gap, it can be seen that the breakthrough is very strong and very few errors occur.

The reason for the breakthroughs is that its horizontal resistance is absorbed by time, and the supply power is completely absorbed. Short time is short of supply. Investors who are buying are forced to seek goods at a higher price.

Or its level of support after a period of supply, the purchasing power is completely consumed, sold at a lower price to find buyers, so there is a gap.

If there is a large volume of pactions before the gap occurs, and the volume of pactions after the gap is relatively reduced, half of them may soon be closed. If the gap does not occur, the volume does not decrease with the distance from the stock price. Instead, the gap will not be closed in the short term.

(3) the technical analysis of the continuous gap is the most significant. It usually occurs in the midway after the stock price breaks away from the pattern to the next reversal or collation. Therefore, the continuous gap can predict the distance that the stock price may move in the future, so it is also known as the measurement gap.

The measure is the vertical distance from the breakthrough point to the starting point of the continuous gap, which is the magnitude of the future stock price.

Or we can say that the distance that the stock price will take in the future is the same as the distance it has gone.

(4) the appearance of consumption gap indicates that the trend of share price will be temporarily put to an end.

If it is on the rise, it means that it will soon fall; if it appears in the downward trend, it will soon rebound.

However, the consumption gap does not mean that the market is bound to turn, though it means there is a possibility of turning.

On the day or the day after the occurrence of the gap, if the volume of turnover is particularly large, and the future of the trend does not seem to be able to vary significantly with volume, this may be a consumption gap. If the closing price of the gap occurs on the day after the breach occurs, the reversal of the day's market will occur, and it will be more clear that this is a consumption gap.

The consumption gap is seldom the first gap in the process of the great change in the previous pattern. Most of the cases are at least a continuous gap in front of it. Therefore, it can be assumed that the first gap in the middle of the rapid rise or fall is a continuous gap, but every subsequent gap may be a consumption gap, especially when the gap is larger than the previous one.

The continuous gap is caused by the great change of stock price, so it will not be closed in a short time. However, the consumption gap is the last phenomenon that the change is about to reach the end point, so it is mostly closed in the short term of 2-5 days.

3. tips

(1) the general gap will be filled.

Because the gap is a vacuum area that has not been traded, reflecting the impulse behavior of investors at that time. When the investment sentiment is calm, investors' Introspection on past behavior is excessive, so the gap will be recovered.

In fact, not all types of gaps will be filled. Breaking through gaps and continuity gaps may not be filled and will not be filled immediately. Only the consumption gap and the ordinary gap can be recovered in the short term, so filling the gap will not help the analysts to observe the market.

(2) will we fill the gap immediately after breaking through the gap? We can observe it from the change of volume.

If there is a large number of pactions before breaking through the gap, then the paction will be relatively reduced after the breach occurs, so the opportunity to fill the gap is only 55. However, if the turnover is large after the gap is formed, the stock price will remain very large when the stock continues to move away from the pattern, so the short term filling may be very low.

Even after it appears, it will be outside the gap.

(3) when the stock price breaks through its region, it rises rapidly, and the volume of the stock is large at the beginning. Then it rises and decreases continuously. When the stock price ceases to be the original trend, the turnover increases rapidly. This is the result of the fierce competition between the two sides. After one overwhelming victory, one of them has formed a huge gap, and this time it begins to decrease again.

This is the change of volume when the gap is formed.

(4) the consumption gap is usually the largest day in the day when the gap is formed (but it may also happen on the next day when the volume is the highest). Then the paction is reduced, indicating that the market purchasing power (or selling power) has been depleted, and the stock price will soon drop (or rebound).

(5) in an upward or downward process, the more gaps appear, the closer the trend is towards the end.

For example, when the third gaps in the market rose, it implied that the market was coming to an end. When the fourth gap appeared, the possibility of a short-term fall was more intense.