Gaps and How Markets Move In Contraction and ExpansionThere are several ways to trade gaps but first, there should be a solid understanding of what Gaps are and how they show up. Markets aren't that hard to read if we have some simple ways to see them that adhere to the principles of movement.
All markets move in contraction and expansion. A Gap is the sudden supply/demand imbalance that comes out of the contraction and shows up as the expansion. These expansions can even be used to measure how far the next expansion will go.
Start with a simple bar chart and erase everything else off the chart. Look and simply see the dense areas of contraction (Range). Then see the expansion (Gap), followed by another contraction.
Look for same-size contractions and expansion and you will start to see how organized price flow can be. It's no different than swings in that minor contractions and expansions make up the major contractions and expansions.
Shane
Contractionandexpansion
DXY9.8.22 DXY I'm trying to show you a contrast in expansion and contraction comparing the dxy to bitcoin. I am very aware that some of this will be unclear for some people, and that is quite alright and it is expected. But persevere because it is worth it. This is the type of processing of a market it is better done when you work the scenarios through your brain and use very few tools because it will give you a better sense of how buyers and sellers will work...And you're doing is basically by scanning the market on one or two time frames...And you will eventually be comfortable incorporating this into your strategy to determine where buyers and sellers are. Their relationship to buyers and sellers is different for expanding markets and contracted markets.
Bitcoin Expansion and contraction9. 7. 22 Bitcoin This is expansion and contraction part 2. It would probably be best to listen to part 1 first. I decided to use some of the other tools that would facilitate my training once I understand how a market expands and contracts. There is one thing I did not say it is video because it's automatic and I've said it so many times before: When I went to the left side of the chart to show expansion, I didn't short the new high. What I did was wait for the market to correct lower to the Breakout, and that's when I would have taken a long trade. This is because the markets were baking new heights, and in this market was making all time new highs. So I wait for the correction lower to be a buyer because it is much safer. Because it is an expanded market, it might take me one or two days to find a good trade because the market is trading higher or lower with greater reach in both directions. I don't care if I miss a trade in an expanded market because they almost always corrects back to the breakout higher. In other words, I am never a buyer on the breakout of a market to all-time new highs because we don't know where the sellers are when a market is at all-time new highs.
