Why there are so many gaps in NIFTY and BANKNIFTY in last 1-2 years alteast

#1
Kind People,

Anybody know Why there are so many gaps in NIFTY and BANKNIFTY in last 1-2 years alteast?

Today also there has been a gap-opening. In my memory there were not so many gap-opening towards up or down before 1-2 years.
 

DSM

Well-Known Member
#2
Markidharhai,

From what I understand, Gaps are caused due to :

* Change in sentiments/market perception.
* News and events
* Increase/decrease in liquidity
* Algo related
* Short/long squeeze
* Combination of the above.

While one may have to go thru historical charts for analysis, one can look at recurring chart patterns to understand reasons why this happens. Below is Nifty 4H chart, which shows run away gap with strong close the next day especially, especially after consolidation in downtrend and a long tail formed with a positive close.

Psychologically, it shows that the price opened up, went to the low of the day, but reversed (and stopped out all shorts) to close above the open price. This shows good demand at the price level, and that bullish sentiment prevailed over bears who would be forced to close their positions.

Note : These are postmortem scenarios, which are always correct and prove a point, and in no way represent a 100% guarantee of a winning trade. As usual, holding discretion and good MM and RM for open positions is necessary.





Kind People,

Anybody know Why there are so many gaps in NIFTY and BANKNIFTY in last 1-2 years alteast?

Today also there has been a gap-opening. In my memory there were not so many gap-opening towards up or down before 1-2 years.
 

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