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What Is a Gap and How Can You Trade It in Forex and Crypto?What Is a Gap and How Can You Trade It in Forex and Cryptocurrencies? When it comes to trading, understanding gaps is pivotal for traders aiming to navigate and capitalise on market volatility. These spaces on price charts where no trading occurs are often exploited by traders looking for a quick reversal or trend continuation. This article delves into the essence of gaps, their types, and three gap trading strategies. Understanding Gaps in Trading Understanding gaps in trading is crucial for both new and advanced traders, as these occurrences can signal significant price movements and opportunities. A gap is observed on a price chart when the price of an asset sharply moves up or down with no trading in between, creating a visible space or 'gap' in the price pattern. They almost always happen at the market open but can also occur after major news events or economic announcements, reflecting a sudden change in sentiment. There are four main types of gaps, each offering different insights and implications for traders: Exhaustion These appear at the end of a price movement and signal that a trend may be running out of momentum, potentially leading to a reversal. This type is characterised by a sudden move in the price in the direction of the prevailing trend, but with the trend quickly losing strength and often reversing after the gap is made. Breakaway Occurring after a period of consolidation, breakaway gaps signify the start of a new trend. They emerge when the price moves away from a trading range or pattern, indicating a significant change in market dynamics and the potential for a sustained move in the direction of the price jump. Continuation These gaps are seen within a strong trend and signal that the current trend is likely to continue. Continuation gaps represent a surge in interest in the direction of the prevailing trend, reinforcing the current momentum and suggesting further movement in the same direction. Common These are the least significant and occur frequently without implying any particular price direction. Common gaps are typically filled quickly and can be a result of minor fluctuations that temporarily create a small jump in the price pattern. The Significance of Gaps in Forex and Cryptocurrency Markets In the world of trading, the occurrence of gaps on price charts holds particular significance, offering insights into market sentiment and potential shifts in price dynamics. This is especially true in the forex and cryptocurrency markets, where they convey unique implications due to the nature of these markets. In forex, gaps are relatively rare compared to stock markets, primarily because forex is traded 24 hours a day, five days a week. However, this unique feature is what makes the gaps important for identifying price movements. Usually, they occur at the beginning of the trading week or after major geopolitical events and economic announcements that happen over the weekend. They’re closely watched by traders as they can indicate a strong initial reaction to news or events, potentially setting the tone for trading in the coming days. Cryptocurrencies, traded continuously 24/7, experience gaps even less frequently than forex. The non-stop nature of this market means that price action is constant, leaving little room for price jumps to form on price charts. However, when they do appear in cryptocurrency markets, often on derivatives charts rather than spot, it can signal extremely impactful events or significant shifts in trader sentiment. Given their rarity, gaps in cryptocurrencies are particularly noteworthy and can represent critical trading opportunities or warnings for investors. In both scenarios, the gap is likely to be filled at some point. Often, this occurs on the same day or within a few days of its appearance. However, a gap can remain unfilled for several weeks or months, depending on the market context. It’s worth determining the type of gap you’re looking at to gauge whether the price will reverse quickly or kickstart a new trend. Three Gap Trading Strategies Now, let’s take a closer look at three gap trading strategies that can be used in the forex and crypto markets. Want to follow along? Using FXOpen’s free TickTrader platform offers access to live forex and crypto charts. Gap and Go Trading Strategy The Gap and Go trading strategy is a popular gap trading technique that emphasises the power of momentum following a sudden market jump. This approach is particularly effective in capturing the initial movement after a gap appears, usually at the opening of the trading week in forex. The strategy focuses on identifying strong momentum indicated by breakaway or continuation gaps on daily or weekly charts. However, it can also serve as a valuable tool for setting short-term direction on lower timeframes. By aligning trades with this initial burst of momentum, traders can potentially capitalise on swift movements before the price settles. Entry Traders typically look for a jump that occurs in the direction of the prevailing trend. Entry is often considered as soon as the candle opens after the gap. Stop Loss Stop losses are commonly placed just above (for short positions) or below (for long positions) the high or low of the previous candle's trading range. Take Profit Profit targets might be set at a nearby support (for short positions) or resistance level (for long positions) on the same timeframe as the entry, allowing traders to lock in returns before the market potentially reverses or consolidates. Quick Reversal Gap Trading Strategy This strategy focuses on exploiting the tendency of gaps that go against an established trend to get filled quickly. They are typically interpreted as common gaps, which arise due to an overstated response to overnight news or weekend events. Unlike exhaustion gaps that signal the start of a new trend, this type usually represents temporary deviations from a prevailing trend, leading to quick reversals as the market reassesses and corrects the initial knee-jerk reaction. This filling process is attributed to the market's natural inclination to maintain a trend unless given a strong reason to reverse. Entry Traders identify an existing trend using a daily or weekly chart. For a bullish trend, the strategy involves looking for a candle opening price that is lower than the previous close (and the opposite for a bearish trend). The entry point may be set when this counter-trend gap is identified. Stop Loss A stop loss may be placed just beyond a nearby swing point. Take Profit Profit targets may be established at the close of the candle before the gap, where the jump is expected to be filled. Small Gap Fill Trading Strategy When trading gaps in forex, it’s common to see small gaps being filled within a short period, often within a day or two. This strategy is tailored to identify spaces that are relatively minor, typically less than half of the previous day's trading range. While strategies that align with momentum and trends may have a higher probability of an effective trade, the market's inherent desire to seek equilibrium makes even small, seemingly insignificant gaps likely to be filled. Entry Traders look for a small price jump, ideally less than half the size of the prior day’s range, entering in the direction anticipated to fill the gap. Stop Loss A stop loss may be placed slightly above (for short positions) or below (for long positions) the day's open, allowing for some intraday price movement. Take Profit Profits may be taken as soon as the close of the candle preceding the gap is met, capitalising on the quick return to balance. While this strategy may carry higher risk due to its simplicity and lack of supporting factors (like trend analysis), its effectiveness can potentially be enhanced by using other forms of analysis. For instance, if the gap occurs near a support or resistance level, the likelihood of the gap filling may increase. The Bottom Line Understanding and trading gaps in the forex and cryptocurrency markets may offer unique opportunities for informed traders. However, it may be worth combining these strategies with a solid understanding of market conditions and technical analysis to enhance their effectiveness. For those looking to apply these strategies and more, opening an FXOpen account could be the next step towards engaging with forex and cryptocurrency markets via CFDs. FAQs What Is a Gap in Trading? A gap in trading refers to a significant price movement on a chart where no trading occurs, leaving an empty space between two trading periods. This jump, either up or down, is often influenced by news events or market announcements. How to Predict a Gap Up or Gap Down? Predicting a gap up or down involves analysing market sentiment, news events, and technical indicators that might influence the opening price of an asset, usually over a weekend or when the market is closed. Traders closely watch for indicators of sudden shifts in demand or supply that could lead to a price jump. What Is the Forex Gap Strategy? The forex gap strategy leverages markets' tendency to fill gaps after they occur. Traders identify potential price jumps over the weekend or after major news releases and position themselves to capitalise on the price movement back to the pre-gap level. How to Trade Gaps? Trading gaps involves identifying the type of gap and employing a strategy suited to its characteristics. Traders might enter trades in the direction of the gap's fill or anticipate a continuation of the trend that caused the jump. What Are the Four Types of Gaps in Trading? The four types of gaps in trading are Breakaway, Exhaustion, Continuation, and Common. Each type indicates different market conditions and potential future price movements, guiding traders on how to position their trades. At FXOpen UK and FXOpen AU, Cryptocurrency CFDs are only available for trading by those clients categorised as Professional clients under FCA Rules and Professional clients under ASIC Rules, respectively. They are not available for trading by Retail clients. This article represents the opinion of the Companies operating under the FXOpen brand only. It is not to be construed as an offer, solicitation, or recommendation with respect to products and services provided by the Companies operating under the FXOpen brand, nor is it to be considered financial advice.
Education
by FXOpen
3
Imbalance Expert : Guide for mastering imabalance'sCryptocurrency trading is an intricate dance, where understanding and interpreting market imbalances can provide traders with a competitive edge. This comprehensive guide aims to demystify the art of trading imbalances, catering to both beginners and seasoned traders. Through a detailed exploration of strategies and considerations, we'll delve into the world of market dynamics, emphasizing the importance of a holistic approach to trading. First example has cool reason to go higher ( EQUAL HIGHS ) and big liquidity pool below Section 1: Understanding Imbalances 1.1 Defining Market Imbalances: Explore the concept of imbalances in the cryptocurrency market. Differentiate between bullish and bearish imbalances. 1.2 Reading the Signs: Learn to identify imbalances on various timeframes. Utilize technical indicators and chart patterns to confirm imbalances. Section 2: The Anatomy of Imbalance Trading 2.1 Spotting Imbalances in Price Action: Analyze real-world examples of imbalances using provided screenshots. Understand how imbalances manifest in different market conditions. 2.2 Tools of the Trade: Explore popular tools like volume analysis, order flow, and market profile to complement imbalance trading. Highlight the role of moving averages and trendlines in confirming imbalances. Section 3: Strategies for Imbalance Trading 3.1 Swing Trading with Imbalances: Discover how to swing trade using imbalances as entry and exit signals. Explore risk management techniques tailored for swing trading. 3.2 Scalping Opportunities: Uncover strategies for intraday trading based on short-term imbalances. Discuss the importance of quick decision-making and tight risk control. Section 4: Advanced Considerations 4.1 Macro and Micro Analysis: Emphasize the need to consider both macroeconomic trends and micro-level price action. Discuss how macroeconomic events can create imbalances with lasting effects. 4.2 Market Sentiment and News Analysis: Incorporate sentiment analysis and news events into the overall imbalance trading strategy. Understand how sudden shifts in sentiment can create imbalances. Section 5: Risk Management and Psychology 5.1 Risk Management Strategies: Explore risk management techniques specific to trading imbalances. Discuss the importance of position sizing and setting stop-loss orders. 5.2 Mastering Emotional Discipline: Address the psychological aspects of trading and how emotions can impact decision-making. Provide practical tips for maintaining discipline during trading. Conclusion: The Art and Science of Imbalance Trading In conclusion, mastering the art of trading imbalances requires a combination of technical expertise, strategic thinking, and emotional resilience. Whether you are a beginner looking to enter the world of cryptocurrency trading or a seasoned trader seeking new insights, this guide aims to equip you with the knowledge and tools necessary to navigate the dynamic landscape of imbalance trading. Remember, success in trading is an ongoing journey that requires continuous learning and adaptation to evolving market conditions. 💡 Imbalances Decoded | 📊 Tools of the Trade | 🚀 Strategies for Success | 🧠 Risk Management Mastery 💬 Share your insights: What are your experiences with trading imbalances, and what additional strategies have you found effective? 🌐✨
INDEX:BTCUSDEducation
by Yaroslav_Krasko
Fair Value Gap Trading StrategyFair Value Gap Trading Strategy To implementing a fair value gap as a trading strategy you need to understand these three basic components of this trading strategy. Time Liquidity Hunt Market Structure Shift Fair Value Gap Let’s begin by discussing the importance of time in trading. According to ICT Trader, time is considered to be fractal, meaning that what happens on higher time frames is reflected in lower time frames if studied in the proper context. In this context, fractal refers to the idea that patterns and behaviors observed on longer time frames, such as daily or weekly charts, can be seen in shorter time frames, like hourly or minute charts. By studying price action and market behavior across different time frames, traders can gain a deeper understanding of market dynamics and potentially identify profitable trading opportunities. Time indeed holds significant importance in the fair value gap trading strategy, particularly when it comes to identifying favorable trading setups. Despite the forex market being open 24 hours a day, not all times present ideal conditions for executing fair value gap trades. That’s where the concept of ICT Kill Zones comes into play. ICT Kill Zones ICT Kill Zones refer to specific time periods during the day that have been observed to offer higher probability trading opportunities. These zones are associated with the entry of smart money, which are institutional or banks who have the ability to influence market direction. In short, ICT Kill Zones correspond to specific time periods during the day that are particularly relevant for trading activities. These zones include the London Open, London Close, New York Open, and New York Close. Traders using the fair value gap trading strategy often focus on these times as they tend to offer higher probability trading setups. The ICT Kill Zones are associated with the entry of smart money and can provide enhanced opportunities for traders to capitalize on market movements. By aligning their trading activities with these specific time periods, traders aim to improve their chances of success. Liquidity in FVG Trading Strategy Liquidity in the market often takes the form of buy stops and sell stops.market makers or smart money intentionally trap retail traders by manipulating prices to trigger their stop losses. The idea is that they move the market in one direction to hunt for stop losses, causing retail traders to place orders in the false direction and set their stop losses at key levels. After the stop loss hunt, the market reverses in the opposite direction, benefiting the smart money. Let’s analyze the above chart from a retail trader’s perspective. When we observe the chart, we notice that the price levels between 44240 and 44280 have proven to be strong resistance in the past. Based on this observation, many retail traders might place their selling pending orders to anticipate of a price reversal at these levels. To manage their risk, they would likely set their stop loss orders just above this resistance area. What is done by market makers or smart money,they could manipulate the market by initially pushing the price upward, deliberately triggering the stop loss orders placed by retail traders. This action would cause some retail traders to think that a breakout is occurring and prompt them to place buying orders while setting their stop losses at levels below the resistance area. Once the stop loss orders have been hunted and triggered, the market makers or smart money may then reverse the price direction. Enhancing Trading Success with the Fair Value Gap Entry Strategy After a liquidity hunt on a higher time frame, you suggest switching to lower time frames such as 15 minutes, 5 minutes, 3 minutes, or even 1 minute to identify certain patterns that may emerge following the stop loss hunt. These patterns include: 1.Sudden or sharp price movements: Following the liquidity hunt, you may observe rapid and significant price fluctuations on the lower time frames. This sharp movement causing market structure shift and provide an extra confluence. 2. Fair value gap (FVG): Look for gaps between the current price and the fair value of the asset. The fair value represents the equilibrium price based on various factors. Identify instances where the market price deviates significantly from this fair value. 3. Entry position based on the Fair Value Gap strategy: Once you spot a fair value gap pattern after the liquidity hunt, you can consider taking a position in anticipation of the market filling that gap. The expectation is that the market will eventually return to the fair value price. It’s important to carefully train your eyes to recognize these patterns after a liquidity hunt and patiently wait for the market to come back and fill the identified gap. Once you have identified a suitable entry position, you can place your stop loss order above the first candle to manage your risk. Please note that implementing such strategies requires careful analysis, experience, and a deep understanding of the specific market you are trading. It’s crucial to conduct thorough research, backtest your strategy, and consider other factors that may influence price movements before making any trading decisions.
Education
by Golden_Star1994
Exploring Forex Trading's Price Gaps: Opportunities and RisksWithin the realm of forex trading, price gaps emerge as a frequent and remarkable occurrence, distinguished by substantial disparities between an asset's closing and opening prices. These gaps materialize due to an array of factors, encompassing shifts in investor sentiment, alterations in market liquidity, and the dissemination of consequential news. Acquiring a comprehensive understanding of the diverse types of price gaps, their underlying causes, and the implications they carry assumes paramount importance for traders aiming to effectively exploit these market opportunities while astutely managing the associated risks. Price gaps come into existence when a discernible void arises between an asset's closing price on one trading day and its subsequent opening price on the following day. These gaps manifest in a variety of forms, each embodying distinctive characteristics and wielding implications for traders. Among the common types of price gaps are breakaway gaps, runaway gaps (also referred to as continuation gaps), and exhaustion gaps. Breakaway gaps frequently manifest subsequent to a period of consolidation or a significant market event. These gaps act as a signal of potential trend alterations, offering traders opportunities to establish new positions in alignment with the emerging market direction. Runaway gaps, conversely, arise within an established trend, reinforcing its continuity. They serve as a testament to surging market momentum, often propelled by fresh developments or an influx of trading activity. For traders who have already positioned themselves in line with the prevailing trend, runaway gaps provide affirmation and the potential for further profits. Exhaustion gaps surface towards the conclusion of a trend, heralding a prospective reversal or temporary pause in the prevailing market sentiment. These gaps are frequently accompanied by dwindling trading volume, serving as a cautious indication for traders to reassess their positions and adapt their strategies accordingly. Comprehending the causative factors behind price gaps is indispensable for traders seeking to decipher their significance and seize potential opportunities. Price gaps can arise due to sudden shifts in investor sentiment prompted by news releases, economic indicators, or geopolitical events. Moreover, market liquidity discrepancies, particularly during periods of low trading activity like weekends or holidays, can contribute to the occurrence of gaps. Traders must meticulously evaluate the implications of price gaps and remain cognizant of the associated risks. While gaps can furnish lucrative opportunities, they also entail potential challenges. Swift price movements during gap openings can lead to slippage, wherein executed orders are filled at prices significantly divergent from the intended entry or exit levels. Additionally, the scarcity of liquidity during gap periods can yield widened spreads, underscoring the importance of deploying appropriate risk management techniques. To adeptly navigate price gaps, traders can employ an array of strategies. These may encompass the utilization of gap trading techniques that harness the initial price movement following a gap, or adopting a more cautious approach that awaits confirmation of the market's response before entering a trade. Furthermore, implementing stop-loss orders and trailing stops can help mitigate risks associated with adverse price movements. Do Gaps Always Close? The closure of gaps in trading is not guaranteed, but statistical data suggests that gaps are closed at least 70% of the time, particularly when looking at weekly gaps. However, it's important to note that not all assets reach such closure levels. Among currency pairs, EUR/JPY, GBP/EUR, and GBP/JPY tend to exhibit a higher tendency to compensate for price gaps. Exhaustion gaps are generally considered the most reliable for closure trades. When attempting to forecast gap closure, it is advisable to analyze the technical chart patterns alongside the fundamental background. If there is a divergence between these factors, it may be wise to exercise caution and refrain from engaging in active trading. In such cases, it is recommended to rely on the forecasts of other instruments to shape the overall trading outlook. Gaps can pose risks for traders in certain situations: 1) Small trading deposits: If a trader is operating with a limited deposit that does not allow for position insurance when faced with significant and unfavorable price gaps, it can be risky. Insufficient funds to cover potential losses from a large gap can result in substantial financial consequences. 2) Lack of proper risk management: If a trader fails to set appropriate stop-loss levels or neglects to place them at all, particularly when holding positions over the weekend where gaps commonly occur, it can leave them exposed to significant losses if the market moves against their forecast. 3) Random price gaps in low time frames: Gaps that appear sporadically in lower time frames can be misleading and confusing. To avoid making impulsive decisions based on such signals, it is important to synchronize the analysis with fundamental events and consider incorporating technical indicators into the trading strategy. Traders who pursue short-term trading with small profit goals are particularly susceptible to the risks associated with price gaps. Even a small gap can lead to losses for this category of traders, as their profit margins may be narrow. In contrast, mid-term and long-term traders typically have less concern about the impact of gaps. Their trading strategies aim for larger profit targets, often spanning hundreds or thousands of points, where the impact of a single gap of a few tens of points is relatively insignificant. Using Price Gaps In Trading Practice: Price gaps can be utilized in trading practice using market and pending orders to take advantage of potential opportunities. Considerations such as the probability of closure, gap size, and time frame are taken into account. For instance, in a 30-minute time frame, if a price gap of at least 20 points is observed at the market opening, the price tends to move within the gap for the first half-hour due to inertia. In the case of a bullish gap, a market order to buy can be placed, while the Take Profit level can be determined using additional analysis tools. Similarly, for a bearish gap, a sell order can be activated. If a gap appears against the prevailing trend, the likelihood of the gap closing increases. In such scenarios, pending orders like Buy Stop for an uptrend or Sell Limit for a downtrend can be effective. One of the challenges is setting an appropriate Stop Loss. Take Profit levels can be adjusted, considering factors such as the Friday closing level, slightly above it, or at local peaks (maximum or minimum) observed on Friday. It is crucial to exercise caution and consider risk management techniques when trading based on price gaps. Traders should thoroughly analyze market conditions, employ suitable order types, and carefully determine their entry and exit levels to optimize trading outcomes. In conclusion , price gaps in forex trading serve as important indicators of market dynamics and present potential opportunities for traders. By analyzing the type of gap, incorporating support and resistance levels, and utilizing technical indicators and candlestick patterns, traders can make informed decisions to capitalize on these market phenomena. It's essential to note that gaps do not always close, and traders should be mindful of this fact. To enhance trading strategies, it is beneficial to align technical analysis with fundamental factors and consider the broader market context. Caution should be exercised, especially when trading with smaller deposits and during periods of increased market volatility, in order to manage the risks associated with price gaps effectively. By incorporating thorough analysis and risk management techniques, traders can navigate price gaps with greater confidence and optimize their trading outcomes.
Education
by FOREXN1
10
📊 Liquidity Gaps CheatsheetIn volatile markets, traders can benefit from large jumps in asset prices if they can be turned into opportunities. Gaps are areas on a chart where the price of a stock (or another financial instrument) moves sharply up or down, with little or no trading in between. As a result, the asset’s chart shows a gap in the normal price pattern. The enterprising trader can interpret and exploit these gaps for profit. 📌 What is a gap? A gap occurs when the price of a security moves quickly through a price level, either up or down, with little trading or pricing available over that time span. 📌 How they are formed Gaps can be caused by several factors, but they are mostly seen as a result of unexpected news or a technical breach of support or resistance. 🔹 On the fundamental side , the news could be a company beating earnings estimates by a large margin, or a speech by a Federal Reserve (Fed) official impacting interest rate expectations. 🔹 On the technical side, gaps can ensue following the break of a prior high/low, or other form of technical resistance or support, such as a key trend line. 💥 Key Takeaways About GAPS 🔹 Gaps are spaces on a chart that emerge when the price of the financial instrument significantly changes, with little or no trading in between. 🔹 Gaps can occur unexpectedly as the perceived value of the investment changes, due to underlying fundamental or technical factors, such as an earnings disappointment. 🔹 Gaps are classified as breakaway, exhaustion, common, or continuation, based on when they occur in a price pattern and what they signal. 👤 @QuantVue 📅 Daily Ideas about market update, psychology & indicators ❤️ If you appreciate our work, please like, comment and follow ❤️
Education
by QuantVue
3
EXPLAINED: Runaway GapLESSON OF THE DAY Runaway Gap A Runaway Gap is a continuation move where the price gaps in the middle of a trend e..g Up or Down. The gap is a void (where no prices overlap between two candles) And then the price follows the previous trend. I like to think of a Runaway Gap as a horse that goes from trotting to galloping. The trend then starts to accelerate and continue in the direction. Specifics for this example: · Previous price moves in a downtrend. · Price then gaps. · Price then follows the continuous downtrend. Please react so I know to provide more daily lessons...
JSE:PIKEducation
by Timonrosso
2
Trade so easy with FAIR VALUE GAPS!Hello trader, you look great today! I have a useful trading tool to offer you. If you are experiencing positive feelings towards me, please consider following me and helping to increase my exposure. FAIR VOLUE GAP First, go to tradingview and search up Fair Volue Gap . Now, you can see your chart dashed lines, to see levels based on these pages. FVG and to make this set up a lot better though we want to clean this up and only show significant Fair Volue Gaps by going into the settings and selecting the auto threshold. What this does is allows the indicator to detect the average best size of each Fair Value Gap to filter out insignificant ones.
OANDA:XAUUSDEducation
by Sphyn-Trader
5
FLSY - Anatomy of a "Good" tradeHi All, This is just to share on how I would approach a trade (as a trader). 1. Look for signs that the stock is forming a bottom (rounded bottom, inverted Head and Shoulders, Adam and Eve), rising above 200 day MA, Golden Cross etc. 2. Check out its longer term charts (ie weekly and monthly) as you will likely see a clearer picture of it's direction. 3. Wait for some triggers (eg breaking above neckline especially on strong volume). FLSY is a good example and had presented several good opportunities for several short term trades recently (could be held for longer term if one had entered earlier around 12.36 (1st Entry in chart) and didn't get stopped out. 1) On 2nd Feb (Initial Breakup), it gapped and broke up above this neckline (as well as it's 200 day MA), everything looks good except volume was just above average. Well, this initial break up failed! Yes, it happens more often than we cared for, especially during the earlier phases of the trend, hence a conservative trader would prefer to wait for a pullback and long if the neckline proved to be a support. 2) on 13 Feb (1st Entry), FSLY once again gapped above the neckline and 200 day MA, but this time the volume was HUGE. However, this was prior to earnings announcements (2 days later, AMC). There is a possibility that earnings beat had been leaked, so if one decide to enter this trade, then it would probably be wise trade small. 3) on 16 Feb (2nd Entry), the day after earnings, which beat expectations (surprise surprise...LOL), many traders will FOMO into the stock especially as it rose above the previous candle's high around 14.20. This turned out to be a very profitabe trade (intraday). Next day however, it formed a "Harami" candlestick (aka "inside bar"), showing indecision at this point. I would raise the stop to 15.30, slightly just under this "Harami" candlestick (which is already a 11% SL from its high @ 17.18). Those with a larger risk appetite could raise the stop to entry price (ie 14.20), allowing for larger volatility which could stop one out prematurely but be prepared to give back all profits if wrong. 4) FSLY had a steep pullback after all (due to poor market sentiment during the whole month of Feb) and found support only at 61.8% of it's large AB up swing. This was also within a prior "Resistance" but turned "Support" zone. It began to form small sideway candles (a signal to long if it starts to break above this "consolidation" range) 5) We had a Long trigger again last Friday (3rd Entry) as the stock started to rise decisvely above the consolidation high @ 14.20. It turned out to be a large candle day, hence I would place initial stop loss just below this large candle (ie 13.55, a 5% initial SL). There is a good chance this stop will not get hit (although nothing is guaranteed LOL). Uptrend is underway for FSLY (above 200 day MA, with the shorter MAs (20 and 50) both rising. However, it could still experience large swings along the way and one has to manage the trade and raise the stops from time to time to protect profits. Just because one is stopped out does not mean the stock is spent. Sometimes it could be just periods of consolidation (short or long periods). Keep it on your watchlist as long as the stock has not shown signs of bearishness on a higher timeframe, set alerts for the next trigger. Disclaimer: Just my 2 cents and not a trade advice. Kindly do your own due diligence and trade according to your own risk tolerance and don't forget that money management is important! Take care and Good Luck!
NYSE:FSLYEducation
by Juliac
1
Types of Gaps !!!👨‍🏫Hello👨🏻‍🏫, dear traders from all over the world🗺️. I'm Pejman🙋🏻‍♂️ & welcome🌸 to one more educational adventure🧭 in Tradingview, but we will not be traders💹 today; We want to look at our charts like a hunter🏹. We look for every clue🐾 we see so that we can hunt suitable positions💱 like valuable creatures💰 and transfer them to the cages as our accounts💳 or wallets💸. Although I'm not too fond🙍🏻‍♂️ of hunting, either legally or illegally. But I know that hunting good positions in the forests🏞️🌳 of Tradingview is not prohibited😉❗. So let's get acquainted with these clues🔎 as soon as possible because the price is skittish🙈, and we don't want to waste the hunting time⏳✅. I said that in Technical Analysis , we look for ways to trade by using the price information, which is recorded on the charts📈. (such as the prey's tracks🔎🐾) Today I want to introduce one of these clues so that you can become a professional position hunter🏹 by identifying the clues👀; But don't forget that you should practice🙌🏻, be careful⚠️, and watch your positions👀, so you don't miss them or rush 🏎️💨to the wrong❌ position🙂. Today's clue is the GAPS . First, let's see what the GAP is🤔. The gap is nothing. I mean, it is something that is nothing😶🙄. It is incredibly paradoxical💥! I'm kidding😉, but the space between candles🕯️ or bars is called a GAP. A gap is created when we see👀 a price gap between two candles🕯️ or bars when the trading volume is high⏫ or low⏬. This difference or space between two candles is called a gap🤏🏻. It is said that gaps are more valuable✅ in higher time frames among the traders, so much coin, much care👀. Gaps, or as the Japanese🎌 term "windows," are significant for hunting🏹 positions, so as hunter traders, we should learn these gaps well👌🏻. The reason🧐 for creating gaps can be factors such as important positive🆒 or negative🙈 news or an increase🔺 or decrease🔻 in supply and demand. It is interesting to know that gaps are primarily seen in Forex , Stocks , and Commodities (especially when markets close and open). The space👌🏻 between the candles means that the price has jumped like a rabbit🐰 from one number to the upper☝🏻 different number. Or, like a monkey🐒, it moved from one number to a lower👇🏻 number. I tried to make it funny😊 and straightforward👌🏻, but these gaps that move up or down have different types, like the year's seasons🌈☁️. We have 4️⃣ seasons in a year and also 4️⃣ types of gaps in the charts. According to personal taste😊, I relate the gaps to the year's seasons and, simultaneously, do not forget the case of hunting positions🏹💰. So fasten your seat belts💺 because we want to travel in time🧳⏳ to all the year's seasons with this post🚩 and learn about the different price gaps, which are one of our clues🐾 to trap positions🪤. Let's start with the autumn🍂 season because we are still in it and can understand it better😌. --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- The name of this type of Exhaustion 🥱 gap. They are seen at the end🔚 of a process, which means that the process may change🔄 at any moment. Just like the autumn🍁 season, it may rain☔ anytime after seeing the clouds🌥️. Another feature of this gap is the increase🆙 in trading volume, so by paying attention👀 to these points and practicing by reviewing the charts📈, you can easily recognize🔎 this gap. --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- The next💁🏻‍♂️ gap is the Breakaway 🏃🏻‍♂️ gap. The breakaway gap is associated with an increase⤴️ in trading volume. This gap occurs when a critical range is broken🤞🏻, representing a strong💪🏻 start🏁 trend or a sign of trend change. Like the blooming🏵️ of some trees🌳 in winter☃️ or the sprouting🌱 of plants from under the snow❄️. Also, This gap is created when the price starts moving from a limited area, like support or resistance ( I'm going to talk about them in the future😉. ) I have to say that the breakaway gap plays a critical👌🏻 role in some of the classic reversal patterns, such as the Head and Shoulders Pattern , Double Top/Bottom Patterns , etc. When The breakaway gap is combined with Classic Reversal Patterns, the breakaway gap adds to these patterns' validity✅. If you want to get acquainted with the most important Classic Reversal Patterns of Technical Analysis , I suggest you read the following post👇. --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- Now it's time for spring🌸🍀, and I'm going to introduce a gap like spring. Spring season is a sign✌🏻 of the continuation of life💐, and this gap in technical analysis shows the continuation of a trend📈. The Continuation gap is also known as a Runaway 🏃🏻‍♂️ gap, occurring in the middle of a downward↙️ or upward↗️ trend. This type of gap creates a kind of confidence for traders to enter. It doesn't occur when the price fluctuates or corrects in a limited area but occurs during a rapid increase or decrease. So, as a result ☑️, if this gap occurs in an upward trend🔺, it indicates the continuation of the upward movement. And when it is created in a downward trend🔻, it indicates the entry of more sellers and further price decline. --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- Now we have reached✌🏻 the last gap🥰. This gap is Common , but I should introduce it as the summer☀️ season. These gaps are very common, And considering the time frame it has, it is expected to fill quickly, which is also called "closing the gap." The filling or closing of the gap means that the price returns🔁 to the same area where the gap was created, like a criminal returning to the crime scene😄. This can be true✅ for gaps as well. Time flies in summer🏝️, and Common and Exhaustion 🥱gaps fill as soon as a blink👁️. You may have heard👂🏻 that gaps are always filled, but this is not permanent🙅🏻‍♂️ and only a strong possibility🤏🏻. For example, Continuation 🏃🏻‍♂️ & Breakaway gaps usually take a long time⌛ to fill. But what if the gap doesn't close🤷🏻‍♂️? Go to any currency pair and examine👀 the recorded data🗄️; You will find that many gaps take a year or more to close. It is interesting😃 to know that the Japanese🎌 have another interpretation of the price gap. They use gaps as continuation and reversal trading patterns (as I said, I'll explain them in future posts🔜😉). It is interesting to know that the combination of gaps can create the Island reversal pattern. The Island pattern consists of two gaps ; One up⬆️ and one down⬇️. We will definitely✅ learn more about these patterns in the following posts🔜, but today we are only focusing on the gaps🧐. --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- Another thing I want to add➕ is about the Heikin-Ashi charts💹 that we learned about in the previous post🔙. Gaps are filtered❌ in Heikin-Ashi charts. As I said, in this chart, the average is displayed between two✌🏻 consecutive candles; even candlestick patterns are filtered❌. So, the type of chart is also essential👌🏻 for finding gaps. Well, I gave you the basic tips to identify these gaps🤏🏻, and now you can carefully look👀 for them in your charts💹. Practice this information for a bit, as I will be back soon🔜 with an educational post👨🏻‍🏫 on how to trade💰 with these gaps. If you have any questions❓, you can ask me💬. We will get acquainted with new clues🔎 in new posts, so until that day, take care of your knowledge📊 and increase it every day📈, because according to Kofi Anan: Knowledge is power💪🏻, and information is liberating. Education📚 is the beginning of progress in every society🏙️, in every family👨‍👩‍👧‍👧. I hope you become stronger🙌🏻 daily by using your knowledge, and I will also increase your progress by teaching you the introduction. I wish🙌🏻 you happiness, health😍, and success😎.
Editors' picks
Education
by pejman_zwin
42
Gap TheoryThe gap theory is short and simple. Not everything needs to be lengthy and laborious. "Everything should be simple as possible, but not any simpler" Break-Away Gap Once a new cycle has begun and you see a breakaway gap in the STARTING of a move, you get confirmation of this new cycle. HOLD. Run-Away Gap Once the trend is continuing for some time and then you see a second gap, this is a confirmation that you are somewhere in the MIDDLE of the move, so you know a further movement in price is expected. HOLD. There is a possibility that you can get multiple runaway gaps. Exhaustion Gap After a move in price had already happened, a gap that signals the END of the move happens. If this is your 3rd gap on the, you should look very closely to distinguish if it is a runaway gap or exhaustion gap. SELL. How do you tell the difference between the exhaustion gap and the runaway gap? Easy, if after the gap happens the price shoot straight up without closing the gap in the next few days ---> runaway gap. HOLD. if after the gap happens the price is closing the gap in the next few days ---> exhaustion gap. SELL. If you like it, follow and like so it will be saved in your saved ideas for future reference.
AMEX:MJEducation
by ZoharCho
5
The Gap Up (1)Stock price has a gap up, how to confirm it is a true break out or a false break out? Maybe a tight consolidation is a method. Tips: This is forex, not a stock. But the tips should apply as well. Before the gap 2017 May, there were several times the price tried to challenge the resistance line. Once gap up, a false break out then followed by a tight consolidation, can say the resistance became support. After the consolidation, price broke out using a way called red three soldier.Then the second break out can be treated as buy hint.
Education
by yunwangvvv
Granolabar's Gap and Crap principles TESTED (2/26 Trade Recap)Introduction In this post, I explain how I utilized the Gap and Crap principles to trade SPY on February 26th, 2021. Recently, I made a post titled "Granolabar's Gap Down Guide (my own style)." The post is linked below. In it, I outlined my strategy for trading gap downs. I highly recommend you read that post before this one to understand the references I am making. In the post, I detailed a specific way to trade gap downs using a system of candles and EMAs. The most important part of the strategy is not necessarily the gap down aspect but the conditions I used to determine entries. Specifically: -------- "To know when to enter the trade, I watch the candle sticks. First, there must be a 5 minute candle that closes below the premarket low. Then there are two possible scenarios from here. Scenario 1, the next candle immediately pushes below the low of the first candle. In this case, you would take puts or sell short as soon as the second candle breaks the low. My reasoning for this is that if the movement is strong, the second candle would not hesitate to make a new low. It is better to enter on the break than to wait for the candle to close and miss out on potential profits, which are often pretty sizable when things are moving quickly. Notice in the below example that had you waited for that candle to close, you basically would have missed half of the entire fall, which lasted 4 5 minute candles. Scenario 2, the next candle does not immediately push below the low of the first candle. In this case, you would wait until there is a candle that closes below the low of the first, instead of merely making a new low. My reasoning is that if the momentum is not strong enough for the second candle to immediately make a new low, the confirmation candle to enter needs to be more definitive. The play is not invalidated because the first candle closing below the premarket lows indicates that there is downwards pressure. In this way you minimize the likelihood of shorting a bear trap while also capitalizing on the fall." -------- I will proceed by explaining my thoughts on exactly what was going as I was watching the market. (Note: stops at entry means that I set a stop loss at the price I originally purchased the option for, meaning that it will sell for breakeven price. This is important later on.) Trade 1: After getting on Tradingview in the morning and opening up the 5 minute SPY chart, I quickly noticed that SPY did not move at all overnight. Despite the lack of a gap, we could still trade with similar principles. I first drew the resistance at premarket high (yellow) and premarket low (blue) as well as a minor support (white). Identifying these support and resistance levels, as well as any applicable trendiness, are an important part to trading successfully. Keep in mind that the cleaner these lines are, the better they will act as critical levels. The first few candles after market-open were just chopping between the minor support line and the premarket high; nothing closed above or below either, so there was nothing to be done there. Do not force a play!!! You do not always have to be doing something in the market. Oftentimes sitting on your hands is the best thing to do. The next candle is when I went on high alert mode. It ended up not only closing under the minor support from premarket (that happened to hold for the first 20 minutes of the trading day), but it also closed below the 50 EMA. At this point, I was just waiting for the next candle which immediately pushed below the low of the first candle, giving the entry signal (Scenario 1). For this play specifically, I kept my stop loss at the premarket high (good resistance) and my target was the premarket low since there wasn’t any major support until then. Once SPY hit the premarket low, I scaled out most of the position and left stops at entry for the rest. Trade 2 The next play came immediately after when the following candle closed right below the premarket low. This candle was followed by a slight pullback, so my conditions for entry changed to a new candle closing below the previous low (Scenario 2). To remind myself, I marked the bottom of the break candle with a white line. This image was from that moment and shows exactly what I was thinking (I don't have the replay feature for any timeframe less than the daily). A few candles later, a candle closed under the break low. This marked the entry of a short position, with the stop loss set at the premarket low (blue line) since it previously acted as a critical level. I decided to start scaling out after seeing a small inside bar green candle, which is typically a reversal pattern. Since I took profit on part of the position, I made sure to set stops at entry for the remaining position. This ensured that the play finished green; it is not worth it to risk the remaining position going negative and cancelling out the gains. If the market takes another turn down from there, just consider reentering a new position. I will continue reiterating this concept since it is crucial for this fast paced trading style. Trade 3 After exiting trade 2, I did not play the break of the premarket low from the bottom up, but it would have been a good scalp also. Theoretically speaking, this was how it would have played out if the rules were followed. The play I did take, however, was the break of the premarket high a little later. Again similar principles: closed above the line, the next candle immediately pushed higher (Scenario 1), and the stop loss was a clean break of the 34/50 cloud on the 1 minute chart. In this play, I scaled out due to a red inside bar; again, I left stops at entry after scaling out the first time to ensure the play stayed profitable. Trade 4 This trade was a slight change of pace; I ended up playing a falling wedge breakout with the same principles. I saw that SPY was forming a clean wedge with the top and bottom trend lines both having 3 solid touches each. The plan was to wait for a break of the 50 EMA (top of the blue cloud in this case) since it typically acts as a support/resistance. The stop loss was a clean break of the 34/50 ema cloud on the 1 minute chart, and the price targets were the white and yellow lines from premarket. As soon as it hit the first price target, I scaled out half the position and set stops at entry to lock in gains. The rest were sold at the second price target since the stops were not triggered beforehand. Right at breakout view: Nearing PT 2, premarket highs: To play devil's advocate on my own plan, I am asking myself why I did not sell the position at the 2:44 PM ET 1 minute bar (the 13:44 bar on my chart above). The candle was fully below the 34/50 EMA cloud and had pushed below the previous "break" candle's low for a second. While those are valid points, it did not satisfy my stop loss conditions. I wait for the second candle after the “break candle” to close below the first candle's low on the 1 minute, which this candle did not. Additionally, it ended up closing as a hammer which is typically a bullish sign. After that fourth play, I did not take any more positions for the day. Typically, the last 30-45 minutes of the day are very volatile, especially on a Friday, and it can be very risky trading in that environment. The options that I typically play expire within an hour of close; any misplay will lead to 50%+ losses instantly. However, if I am in a position that goes into the last 30-45 minutes of the day, I will not close it just because it hit that time of the day. Conclusion: I hope you enjoyed this post; it may have been a little lengthy again, but I wanted to detail exactly how I used the principles that I devised to trade. There are 3 key takeaways: 1. The candle stick rules I use to decide when to enter a trade is a good way to catch breakouts while minimizing fakeout risk. It may mean that your entry is not exactly the first bar of the breakout, but the additional safety will help the majority of the time. 2. The rules I devised in scenario 1 and 2 are not limited to Gap and Crap setups. I will use them on whatever a clear breakout opportunity presents itself, including ascending triangles, bull flags, bull pennants, symmetrical triangles, falling wedges, cup and handle, inverse head and shoulders, etc. 3. Always make sure you set stops at entry if you reach a take profit level and sell a portion of your contracts. If you have any questions, feel free to leave a comment. I will try to read all of them :) Have a great day and I wish you well. -Granolabar
AMEX:SPYEducation
by granolabar_trades
4
Granolabar's Gap Down Guide (my own style)Introduction Within the past week, AMEX:SPY has become increasingly volatile, with massive gap ups and downs followed by all day runs extending more than 3% in either direction. This is apparent with a cursory glance at the following chart. With this volatility comes uncertainty, especially for those who are swing trading on the timeframe of a few days to a few months. However, we can use this increased volatility to our advantage. i am going to introduce my way of trading these days, particularly the ones involving gap downs. Identifying the Setup Identifying the setup is relatively simple, but there are a variety of factors that can improve your chances of success. Firstly, the stock needs to have gapped down overnight. This one is quite obvious and easy to identify; look for a literal gap in the prices going from after hours to premarket, like those identified in the following chart of SPY. Secondly, there are a few things that can improve the chances of this strategy playing out. For example, if the stock recently hit a supply zone and rejected, the gap down is more likely to be followed by more downside as the stock is already in "pullback mode." Additionally, trendlines are another great thing to keep in mind. For example, SPY recently hit a nearly 4 month long strong trendline and rejected. Generally speaking, the larger the timeframe that the trendline is identified on and the more "touches" it has, the stronger it will be. I often find it useful to work my way down from the 1 month or 1 week chart down to the hourly to identify trendiness that I need to keep in mind. Trading the setup To trade this setup, I like to primarily stick to the 5 minute chart. The one minute chart has too much noise, while the 15 minute takes too long for confirmation that you would miss a sizable amount of the move. Once you are on the 5 minute chart, draw a horizontal line at the bottom of the premarket low, as shown below. This will be the critical value to watch. Theoretically, you want to enter when that line breaks , BUT there are often fakeouts around these critical levels. To know when to enter the trade, I watch the candle sticks. First, there must be a 5 minute candle that closes below the premarket low. Then there are two possible scenarios from here. Scenario 1, the next candle immediately pushes below the low of the first candle. In this case, you would take puts or sell short as soon as the second candle breaks the low. My reasoning for this is that if the movement is strong, the second candle would not hesitate to make a new low. It is better to enter on the break than to wait for the candle to close and miss out on potential profits, which are often pretty sizable when things are moving quickly. Notice in the below example that had you waited for that candle to close, you basically would have missed half of the entire fall, which lasted 4 5 minute candles. Scenario 2, the next candle does not immediately push below the low of the first candle. In this case, you would wait until there is a candle that closes below the low of the first, instead of merely making a new low. My reasoning is that if the momentum is not strong enough for the second candle to immediately make a new low, the confirmation candle to enter needs to be more definitive. The play is not invalidated because the first candle closing below the premarket lows indicates that there is downwards pressure. In this way you minimize the likelihood of shorting a bear trap while also capitalizing on the fall. Let's Talk Take Profit and Stop Losses Now that you have successfully entered the position at an optimal place, the next thing to consider is where you want to exit, whether that is to secure the tendies you just made or protect yourself from further losses. Note, this part is completely up to you and your risk or reward tolerance. Assuming that it all goes to plan the the stock starts to fall: I typically trade weekly options for this kind of play, as it is a short term play. Because options premiums move quickly in both directions, I will take profit at 25% with about half the position if the candles are getting smaller, indicating that the trend may be weakening. Then I will set a stop at open, meaning that I will sell the remaining portion of the position if the contract goes back down to my purchase price; this guarantees that ultimately the play is profitable. However, if the candles stay rather large, I will hold the position until the candles do start to get smaller, and sell half the position there, often around the 50%, 75%, or 100% profit mark. If the option does hit 100% profit, I will almost always sell half, with very very few exceptions. This ensures that even if the other half of my position expires worthless(worst case scenario), I come out of the play completely unscathed. If the play does not go according to plan: Let's assuming that right after you enter based on the conditions above, the stock reverse to the upside. Now the question becomes, when do you sell to prevent yourself from taking major losses. For this I use my EMA clouds, or simply just EMAs with the region between the lines shaded in. I typically have a 5/12 EMA cloud (green) and a 34/50 EMA cloud (blue). As soon as one candle closes above the 5/12 green EMA cloud on the 5 minute chart , and the next candle closes above the first candle, that Is when I take the loss and move on. Often times, when playing this strategy, the price will come back up and retest the break line; do not panic if the position is immediately red, but also stick to the stop loss rules mentioned above. This cloud strategy also applies to closing the last half of the profitable position mentioned above. When you are left with half a position at 100% profits or more, I will wait for reversal to sell. The reversal tends to happen when one candle closes above the 34/50 EMA cloud on the 1 minute, and the next candle pushes past the first high. There are also many other ways to market the bottom, such as bullish divergence, engulfing candle, abandoned baby, etc. TLDR This is my way of trading gap downs that utilizes candle sticks and the EMA clouds to determine Stop loss or Take Profit places. Simply put, buy puts when the price cleanly breaks the premarket low, ride with the clouds until they suggest a reversal or hit a stop loss point. if you have any questions or comments, please feel free to let me know. I would love to hear other perspectives or criticisms. Also, the "clouds" are just EMAs filled in with crayons, but if you want the script, it's in my profile.
Editors' picks
AMEX:SPYEducation
by granolabar_trades
30
What is a price gap? How to trade the price gap?What is a price gap? A price gap appears on the price chart as a blank space, and the blank space represents the time when there was no trading activity in that particular price level. 4 Types of Price Gaps 1. A breakaway gap happens when the security traded in a narrow range for some time, and then the security jumps to a different price level. This indicates interest in the security to test a different price level. 2. A common gap happens because of traders daily buying and selling activity. 3. A continuation gap is a measuring gap to determine if the current trend will continue. 4. An exhaustion gap is a gap that happens toward the end of a trending period. This can be a sign of a price reversal is about to happen. How to trade the price gap? Traders should trade in the direction of the breakaway gap and continuation gap. Traders should consider carefully before adding to their current position when they encounter an exhaustion price gap. What are some of the reasons one may fail to trade the price gap? Possibly due to misinterpreting the exhaustion gap as a continuation gap, and possibly misinterpreting the bull or bear trap as a breakout gap. Possibly it was initially a continuation gap or a breakout gap correctly identified, but suddenly the trend changed direction and trapped the traders. Thank you for reading! Greenfield Remember to click "Like" and "Follow!" Disclosure: Chart interpreted and article prepared by Greenfield. A market idea by Greenfield Analysis LLC for educational material only.
NASDAQ:TSLAEducation
by GreenfieldAnalysis
16
Bitcoin - What is GAP?You may have noticed that I often use the word GAP, after many questions about what it is. I thought I'd tell you. What is GAP? If translated verbatim, a GAP (GAP) is a gap, the difference between quotes on Friday and the opening of the market on Monday. And if the difference between the closing price on Friday and the opening on Monday is significant, then a jump will occur. That is, the price is noticeably higher or lower than the price that was on Friday and it is clearly visible on the chart, as in the example below: We can see that the closing price on Friday was about $9295 and the opening price on Monday was $9705. That is about 410 points higher than the closing price on Friday: And this gap, which is formed between the market close price on Friday and the opening price on Monday, is called the GAP. Naturally, a GAP is not always formed. On average, it can be seen once a month and is more common in Forex and stock markets. Sometimes more often, sometimes less often, but the fact is that GAPs happen and you can make money on them. Why do GAPs happen? GAPs occur because during the time when the market is not active, namely over the weekend, a certain number of sell and buy orders are accumulated. And when the market opens on the night from Sunday to Monday, these very orders collapse and create a jump, as we saw on the chart earlier. Of course, this does not always happen, but only when there is a significant advantage in Buy or Sell orders accumulated over the weekend. Market makers see a huge number of Buy or Sell orders and, accordingly, we see the price visually above or below the market close values on Friday. As for the crypt currency: the futures market does not work over the weekend, while the crypt currency exchanges work 24/7, the price during the weekend can be called. It is worth noting one important point. As a rule, GAPs tend to close. Let us consider an example: Why do GAPs tend to close? The fact is that when the market opens significantly higher or significantly lower than Friday's price, then many orders are activated, many pending orders to buy or sell. Naturally, the stops of these orders are located near the Friday closing price. And thus market makers try to knock out the stops of those guys whose orders have worked at the opening of the market and take their money for themselves. After the gap was closed, the market can go absolutely in any direction. There are no special regularities here. In general, the gap tends to close, but sometimes it happens that there is a jump in opening prices on Monday, and it continues. It happens only when there is a strong trend movement or some fundamental factors come into play. For example, something could have happened in the economy over the weekend. That is, there is a tendency to close, but not always. You should keep that in mind! The probability of closing the gap is ≈ 70% Push ❤️ if you think this is a useful idea! Thanks for your support!
CME:BTC1!Education
by Valeriia_Top
7
Gap Fill Psychology of Market ParticipantsI know of a lot of traders who only trade gaps due to their high predictability. Whether the move is up or down, the emotions of trapped traders are the same. If you are part of the range that is trapped, you are only thinking about one thing, how do I exit this trade with as little loss as possible? The graph above shows that there are too many people trapped above to fit into one small candle. As soon as the price approaches the range, those willing to take a bigger loss get on the life boat first. Those who are holding out to break even continue to hope that the price will go back into the range. When they realize that the price is not coming back into the range, that's when their emotions kick into to hyper drive and they realize the price may never come back into the range. The thoughts are: This is a scam! Why does this always happen to me! Of course the price would reverse here, I have the worst luck! OMG what if this is the start of a crash! I usually don't post ideas on gaps, but below you can see the gap idea that I posted for Danaher, a company that made a COVID test that produces results in under 4 hours. The price came right back down to the gap and reversed. Sometimes gaps fill, and sometimes price only reaches the tip of the gap. Two very distinct areas to set stop losses for your trades.
CME_MINI:ESM2020Education
by ttrending
1
The Importance of Gaps in Technical AnalysisThree types of gaps: Breakaway, Runaway or Measuring Gap and Exhaustion Gap. Breakaway gap: 1.At a completion of an important price pattern and generally the breaking of a resistance occurs on a breakaway gap They sign the beginning of a significant market move 2.Breaking of a major trendline, in a reversal signal can also see a breakaway gap 3.They occur on heavy volume 4. Heavier are the volume, less likely the gap will be filled 5.The gap could be filled (generally not all the gap) 6. Upside gap they can work as support areas for subsequent market corrections 7. During an uptrend, it is important that prices do not follow below the gap, otherwise it is a sign of weakness If you are interested in Technical Analysis Theory, please subscribe and watch my Lessons studio.youtube.com
NASDAQ:GOOGEducation
by Mauriello
19.2.2020 - Bitcoin (BTC / USD)Hi Traders! Today we look at a bit specific bitcoin analysis. It will be about bitcoin but on CME futures exchange. Have you heard of CME gaps? Many people are starting to talk about CME gaps. How do these gaps actually come to existence? There are two options: CME doesn't trade futures over the weekend and is off. However, crypto exchanges normally work at weekends, so the first way is that there is a strong movement at the weekend and we open Monday at a totally different value than we closed on Friday. The second way is that bitcoin simply has such a strong up/down movement that it flies through the order book and creates a GAP. GAP acts as a magnet on the graph. Many people know about this, but they don't know the logic behind it. In the first case (the weekend), there will be many unfulfilled orders at that point. After a strong movement, the graph later gets tired and still comes after these orders. Of course, this does not work 100%, but in the vast majority of cases, it does. We currently have a GAP blank at a level of $ 8,500. It's extremely difficult to determine whether this gap is filled or not. There came a wick, but exactly to the edge. If the GAP is not completed in a given week, it will usually only be completed after a certain cycle has been completed. Will it be so? May the crypto be with you!
CME:BTC1!Education
by DolleroTechnology