Thread 🧵 on Gap Analysis in charts

Have you ever wondered what causes gaps in price charts and what they mean?

Well ,you have come to the right place

Gap is an area in chart where no trade took place and this happens between close of a market and next days opening 👇
(1/n)

Market has a tendency to fill gap where no trading has took place.

Normal gap always fill up.

Gaps generally indicates breakout or breakdowns that happens due to liquidity problems,sudden change in fundamentals or sentiments

(2/n)
They occur in daily chart frequently and rarely occurs in weekly and monthly charts

Before we get into different types of gap formation here is a chart showing a gap so that you may know what we are talking about

A gap is formed during uptrend(price moving up)

(3/n)
Here is another chart where you can see the gap is being filled after it is made

This are common and may happen regularly in smaller timeframes

(4/n)
Now let us categorize gaps into 4 types according to technical analysis:

1)Common Gap
2)Breakaway Gap
3)Runaway Gap
4)Exhaustion Gap

We will understand each gap deeply why it is formed and the psychology behind each

Here is a chart showing all the 4 gaps together

(5/n)
1)Common Gap

This gaps are also referred to as trading gap and are really uneventful which naturally happens everyday so its common.

Congestion area create this gaps and notice after gap up generally price moves to beginning of the gap.

(6/n)
They are filled easily for example a news of ex dividend can create this gap supported with low volume in next trading days and may take few days or week to fill it

Here is a chart showing common gap that is filled in next 2 days

Next gaps are actually interesting 😃

(7/n)
2)Breakaway Gap

This gaps are formed when price is breaking any trading range for example major support or resistance area in congestion area

A congestion area is just a price range where the market has traded for some period of time or weeks.

Check this chart

(8/n)
The area near the top is resistance and near the bottom is support. Thereby to break out this areas either requires more buyers then seller or viceversa
Volume should pick up significantly,for not only increased enthusiasm but people sitting on wrong side to cover position
(9/n)
Do not go with the trap that this gap may be filled easily rather participate with the new trend that is created by either breakout or breakdown

Sometimes it may take 2-3 years to fill this gap(noticed in few stocks)

(10/n)
3)Runaway Gaps

They are also called measuring gaps and are best described as gaps that are caused by increased interest in the stock

This gaps are created in almost panic or satisfaction scenarios where volume comes during and after the gap

(11/n)
Increase of interest happens sudden by those who has missed to buy in the initial rally and waited for retracement levels to buy but it does not come back and so it gaps up previous days closing
News based action make this gaps generally(govt policy changes,results,etc)

(12/n)
No support or resistance areas are broken as this gaps are created while the stock is moving in any trend up or down so its a run away gap.They are also not filled easily

This chart is showing a runaway gap with huge volume

(13/n)
4)Exhaustion Gaps

This gaps are created near any major top or bottom basically near the end of any major up or downtrend

A pattern is formed after this gap that reverses the trend with huge volume and also marks the end of previous trend

(14/n)
One can mistaken this for runaway if they do not see the exceptionally high volume
This gap are filled easily as price reverse their trend
Volume increases more after breakdown or breakout
In the chart notice there was one more day of trading after which stock plunged down
(15/n)
Conclusion:

There is an old saying that the market abhors a vacuum and all gaps will be filled

While this may be true for common or exhaustion gap but waiting for runaway gaps to be filled can be devastating

(16/n)
Gaps are significant development in price action and chart analysis thereby should not be ignored

Retweet and follow so that other people know an important aspect of chart and trade accordingly ✍️

All the best 🔥

You can check my other threads in pinned tweet section

(17/n)

More from All

॥ॐ॥
अस्य श्री गायत्री ध्यान श्लोक:
(gAyatri dhyAna shlOka)
• This shloka to meditate personified form of वेदमाता गायत्री was given by Bhagwaan Brahma to Sage yAgnavalkya (याज्ञवल्क्य).

• 14th shloka of गायत्री कवचम् which is taken from वशिष्ठ संहिता, goes as follows..


• मुक्ता-विद्रुम-हेम-नील धवलच्छायैर्मुखस्त्रीक्षणै:।
muktA vidruma hEma nIla dhavalachhAyaiH mukhaistrlkShaNaiH.

• युक्तामिन्दुकला-निबद्धमुकुटां तत्वार्थवर्णात्मिकाम्॥
yuktAmindukalA nibaddha makutAm tatvArtha varNAtmikam.

• गायत्रीं वरदाभयाङ्कुश कशां शुभ्रं कपालं गदाम्।
gAyatrIm vardAbhayANkusha kashAm shubhram kapAlam gadAm.

• शंखं चक्रमथारविन्दयुगलं हस्तैर्वहन्ती भजै॥
shankham chakramathArvinda yugalam hastairvahantIm bhajE.

This shloka describes the form of वेदमाता गायत्री.

• It says, "She has five faces which shine with the colours of a Pearl 'मुक्ता', Coral 'विद्रुम', Gold 'हेम्', Sapphire 'नील्', & a Diamond 'धवलम्'.

• These five faces are symbolic of the five primordial elements called पञ्चमहाभूत:' which makes up the entire existence.

• These are the elements of SPACE, FIRE, WIND, EARTH & WATER.

• All these five faces shine with three eyes 'त्रिक्षणै:'.
#ஆதித்தியஹ்ருதயம் ஸ்தோத்திரம்
இது சூரிய குலத்தில் உதித்த இராமபிரானுக்கு தமிழ் முனிவர் அகத்தியர் உபதேசித்ததாக வால்மீகி இராமாயணத்தில் வருகிறது. ஆதித்ய ஹ்ருதயத்தைத் தினமும் ஓதினால் பெரும் பயன் பெறலாம் என மகான்களும் ஞானிகளும் காலம் காலமாகக் கூறி வருகின்றனர். ராம-ராவண யுத்தத்தை


தேவர்களுடன் சேர்ந்து பார்க்க வந்திருந்த அகத்தியர், அப்போது போரினால் களைத்து, கவலையுடன் காணப்பட்ட ராமபிரானை அணுகி, மனிதர்களிலேயே சிறந்தவனான ராமா போரில் எந்த மந்திரத்தைப் பாராயணம் செய்தால் எல்லா பகைவர்களையும் வெல்ல முடியுமோ அந்த ரகசிய மந்திரத்தை, வேதத்தில் சொல்லப்பட்டுள்ளதை உனக்கு

நான் உபதேசிக்கிறேன், கேள் என்று கூறி உபதேசித்தார். முதல் இரு சுலோகங்கள் சூழ்நிலையை விவரிக்கின்றன. மூன்றாவது சுலோகம் அகத்தியர் இராமபிரானை விளித்துக் கூறுவதாக அமைந்திருக்கிறது. நான்காவது சுலோகம் முதல் முப்பதாம் சுலோகம் வரை ஆதித்ய ஹ்ருதயம் என்னும் நூல். முப்பத்தி ஒன்றாம் சுலோகம்

இந்தத் துதியால் மகிழ்ந்த சூரியன் இராமனை வாழ்த்துவதைக் கூறுவதாக அமைந்திருக்கிறது.
ஐந்தாவது ஸ்லோகம்:
ஸர்வ மங்கள் மாங்கல்யம் ஸர்வ பாப ப்ரநாசனம்
சிந்தா சோக ப்ரசமனம் ஆயுர் வர்த்தனம் உத்தமம்
பொருள்: இந்த அதித்ய ஹ்ருதயம் என்ற துதி மங்களங்களில் சிறந்தது, பாவங்களையும் கவலைகளையும்


குழப்பங்களையும் நீக்குவது, வாழ்நாளை நீட்டிப்பது, மிகவும் சிறந்தது. இதயத்தில் வசிக்கும் பகவானுடைய அனுக்ரகத்தை அளிப்பதாகும்.
முழு ஸ்லோக லிங்க் பொருளுடன் இங்கே உள்ளது
https://t.co/Q3qm1TfPmk
சூரியன் உலக இயக்கத்திற்கு மிக முக்கியமானவர். சூரிய சக்தியால்தான் ஜீவராசிகள், பயிர்கள்

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The Swastik is a geometrical figure and an ancient religious icon. Swastik has been Sanatan Dharma’s symbol of auspiciousness – mangalya since time immemorial.


The name swastika comes from Sanskrit (Devanagari: स्वस्तिक, pronounced: swastik) &denotes “conducive to wellbeing or auspicious”.
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"🕉स्वस्ति ना इन्द्रो वृधश्रवाहा
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The Swastika represents the living creation in the whole Cosmos.


Hindu astronomers divide the ecliptic circle of cosmos in 27 divisions called
https://t.co/sLeuV1R2eQ this manner a cross forms in 4 directions in the celestial sky. At centre of this cross is Dhruva(Polestar). In a line from Dhruva, the stars known as Saptarishi can be observed.
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