The stock market trend can be judged by the following gaps in the stock market: first, ordinary gaps, which are not very helpful for predicting the trend, and can be ignored; second, breakthrough gaps, the larger the gap, the more intense the future volatility ; Third, continuous gaps, which occur more than 2 times in a row, reflect the smooth development of the market with medium trading volume; Fourth, expendable gaps, also known as fading gaps, generally appear at the end of the trend.
How to use the gap pattern to judge the stock market trend
- Ordinary gap
It doesn’t help much in predicting trends and can be ignored. Because it is generated when the trading volume is very small or when the volatility is narrow.
- Breakthrough gap
It usually occurs when the trading volume is large or after an important price level is broken or at the beginning of a new big fluctuation. When the exchange rate gap is large and far away from the original price, it shows that its real breakthrough has begun, so the larger the gap, the more intense the future fluctuations.
- Continuous gapping
If it occurs more than 2 times in a row, it reflects that the market is developing smoothly with medium trading volume. In an up (or down) trend, these gaps will act as support (resistance) zones for future market corrections. Because this gap group generally occurs in the middle of the overall trend, it can be traded by taking advantage of the rule that the magnitude of the future rise (or fall) will double in the direction of the rise (or fall).
- Consumable gap
Also called recession gap, it usually appears at the end of the trend, and it is a rapid rise (or fall), so there will be a turning point in the subsequent market. This gap is often after the (a)(b) gap occurs, and when it is filled, it is the day when the trend will subside, and measures should be actively taken to avoid losses.