The implication of the signal is that an upward trend may be about to end soon. This signal reflects a significant shift from buying to selling activity that usually coincides with falling demand for a stock. In some cases, these gaps don't last rather, they're filled as trading action brings the price back towards the previous close. An exhaustion gap is a technical signal marked by a break lower in prices (usually on a daily chart) that occurs after a rapid rise in a stock's price over several weeks prior. Gaps in a stock chart occur when the price of a stock moves suddenly up or down, usually in response to news outside of market hours.In other words, there was no trading, defined as an exchange of ownership in a security, between the price point where the runaway gap began and where it ended. Intraday: The reason that people expect to gaps to close is because if a stock was fairly valued at that point by the market, then price will explore that area again to test for balance between buyers and sellers (again). A runaway gap, typically seen on charts, occurs when trading activity skips sequential price points, usually driven by intense investor interest.A breakaway gap could also occur out of another type of chart pattern, such as a triangle, wedge, cup and handle, rounded bottom or top, or head and shoulders pattern. When the price breaks out of a well-established trading range via a gap, that is a breakaway gap. A breakaway gap occurs when the price gaps above a support or resistance area, like those established during a trading range.Common gaps are also known as "area gaps" or "trading gaps" and tend to be accompanied by normal average trading volume. Common gaps generally get filled relatively quickly (usually within a couple of days) when compared to other types of gaps. In general, there is no major event that precedes this type of gap.
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