should gap use as a support or resistance?

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fire_gun

Member
#1
#1
i have simple query.. should gap up or gap down should be used as support or resistance i have attached a chart of bharti plzzz let me know how will gap works on this chart and how much volumes matters in gap up or gap down..... senior member plzz help ....:)
 

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sudoku1

sudoku1

Well-Known Member
#3
#3
fire_gun said:
i have simple query.. should gap up or gap down should be used as support or resistance i have attached a chart of bharti plzzz let me know how will gap works on this chart and how much volumes matters in gap up or gap down..... senior member plzz help ....:)
Click to expand...
THERE R 4 TYpes of general gaps...........
>breakaway gaps
> runawaygap s
> exaustion gaps
>common gaps

not always does the gap work as a support or res....u have to also note the volumes ,how long the price osscilated at that particular area ? & also identify which type of gap it is.:)
 
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rajaram.dilipkumar

Well-Known Member
#5
#5
fire_gun said:
i have simple query.. should gap up or gap down should be used as support or resistance i have attached a chart of bharti plzzz let me know how will gap works on this chart and how much volumes matters in gap up or gap down..... senior member plzz help ....:)
Click to expand...

the bharti chart has a runaway gap which typically happens on low volume . In any case volume doesn't play a key role in runaway gaps.
Also its important to note that runaway gaps usually take a much longer time to be filled as it implies the presence of a very strong trend.
Breakaway gap is usually preceded by a classical break-out like ascending triangle , rounding bottom ,inverted h & s etc... the key point in a break-away gap is that if the volume is high before the gap then there are even chances that it will get filled even in a minor reaction and in that case the gap area may act as a support.
Find BHEL chart which shows a breakaway gap , between 2462-2503 area after a rounding bottom formation ,which got filled in the recent correction..
 
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F

fire_gun

Member
#6
#6
rajaram.dilipkumar said:
the bharti chart has a runaway gap which typically happens on low volume . In any case volume doesn't play a key role in runaway gaps.
Also its important to note that runaway gaps usually take a much longer time to be filled as it implies the presence of a very strong trend.
Breakaway gap is usually preceded by a classical break-out like ascending triangle , rounding bottom ,inverted h & s etc... the key point in a break-away gap is that if the volume is high before the gap then there are even chances that it will get filled even in a minor reaction and in that case the gap area may act as a support.
Find BHEL chart which shows a breakaway gap , between 2462-2503 area after a rounding bottom formation ,which got filled in the recent correction..
Click to expand...
thanx alot...:) plzz continue posting about rest of the two gaps >exaustion gaps
>common gaps with charts:) it will be great help......:D
 
R

rajaram.dilipkumar

Well-Known Member
#7
#7
fire_gun said:
thanx alot...:) plzz continue posting about rest of the two gaps >exaustion gaps
>common gaps with charts:) it will be great help......:D
Click to expand...
look at intraday neyveli which saw a break away gap from descending triangle and that gap is still acting as a upside resistance(at 224)..
Exhaustion gaps can be identified only with the price and volume action after the gap has already happened and normally it happens quite close to a up or down move indicating a reversal..will post if i see one on the charts.
Normally it difficult to make money from exhaustion gaps while breakaway and runaway gaps provide fantastic trading opportunities .
 
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rajaram.dilipkumar

Well-Known Member
#8
#8
exhaustion gap in indian bank gets completed by downside breakaway gap leading to a pattern called island reversal...as you can see from the chart we cant make money from exhaustion gap as it often seems like a runaway gap ( which indicates strength while exhaustion gap indicates reversal ).
 
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