GAP THEORY

❖ There are four kinds of Gaps

1) Common Gap

-0.33% to +0.33%

2) Break Away Gap

It is the strongest gap. When the market is in range and the range is
broken by a gap. It is very strong. It mostly happens at the beginning
of a trend. Wait for at least 5 minutes when this happens.

Good for swing trading index and stocks too.

3) Run Away Gap

When there is no consolidation but there is a big gap. It shows that the
trend is healthy. This mostly happens after the breakaway gap.

This shows strength.

Run Away gap shows a good signal for a swing trader to not exit from
his existing trade.
4) Exhaustion Gap

When there is a big gap but the price reverses and fills the gap and
continues. It is an exhaustion gap. It continues that trend for a short-
term period.
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