Smart money does not want to have to buy the stock at high prices. Gapping up through an old area of supply as quickly as possible is an old and trusted method – a way of avoiding resistance.The problem now is how to avoid the old resistance If the smart money is bullish, and higher prices are anticipated, the smart money will certainly want a rally. The smart money knows exactly where these resistance areas are. Maximum time this gap does not fill quickly or on the same day. Generally appears after completion of important patterns like price in consolidation range or any continuation or reversal pattern. The breakaway gap means breaking the important support or resistance or significant trend line in the form of the gap. Gaps are divided based on the context in which they appear. Another occurrence with gaps is that once gaps are filled by price, the gap tends to reverse direction and continue its way in the direction of the gap (for example, in the chart BELOW of RELIANCE, back upwards). The closure rate (gap-fill) for down gaps increases if the prior day’s open to close move was downward.Īfter the gap price tries to fill the gap. The closure rate (gap-fill) for up gaps increases if the prior day’s open-to-close price trend was also up. The gap-fill refers to the price retrace and close the level where the origin of the gap occurs. The chart below of RELIANCE stock shows the gap up acting as support for prices. The Up gap act as a support zone and the down gap act as a resistance zone. If they are bullish they gap-up price above the supply zone GAP act as Support and Resistance Smart money trying to skip important support and resistance level, i.e.Gaps also occur due to the overnight sentiment of the participant or any big news.Therefore, gaps are almost always at price levels where there is a supply and demand imbalance at the open. The gap is down because of the aggressiveness of the sellers, I mean there are more sell orders at the open than willing demand at the prior day’s close. The gap is up because of aggressiveness by buyers, I mean there are more buy orders at the open than there is available supply at the prior day’s closing price. Gaps Greatest imbalance between demand and supply.Price gaps are simply areas on the chart where no trading has taken place. A gap occurs when prices skip between two trading periods, skipping over certain prices. The difference between two consecutive candles’ closing price and opening price is called the gap. 5 simple day trading gap strategy What is Gap Trading Strategy?.At the end of this article, you will understand the following pointers in detail. Please read our previous article, where we discussed VWAP Trading Strategy in detail. In this article, I am going to discuss How to Day Trade with 5 simple GAP Trading Strategies. Data Structures and Algorithms Tutorialsīack to: Trading with Smart Money GAP Trading Strategies.
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