Understanding Gaps: Common, Breakaway, Runaway, and Exhaustion Gap
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- Опубліковано 15 чер 2024
- What Is a Gap?
-When a stock ends the day at a certain level and then starts at a new level even though no trades took place.
-Gaps are usually from one day to the next.
-The reason is that something within the company or industry can change: earnings report, etc.
-Weekly charts can also have gaps, but that usually happens over the weekend and it isn't as common.
4 Types of Gaps:
1. Common:
Likely caused by low trading volume.
It will usually be filled (prices slowly revert to that gap).
2. Breakaway
-More meaningful than common gaps
-They can happen in the middle of the trading day
-They have a downward momentum
-Suddenly the stock dips down below the support line. The gap is between the support line and the dip down. This is due to a change in psychology, and people start to sell their shares.
-Make sure you see an increase in volume at the gap point. That is confirmation of the downward move.
-Another way to be sure that the breakaway gap is a healthy gap is if it happens with another pattern (e.g. a descending triangle pattern).
3. Runaway
-Similar to the breakaway gap
-Instead of going to the down side it is going to the up side
-It is basically a stock price jumping up to a new level (typically due to product releases, news events, etc)
-Anything that creates positive sentiment creates a runaway gap
-There are three possibilities it can go through:
1. Downard trend and back up, hops and continues to go up
2. Upward incline, gap to incline
3. Downward trend to a slingshot upward
-Runaway gaps are more powerful when they come out of an ascending triangle or trend line.
4. Exhaustion
-Very good to trade with, if you watch them
-They can be dangerous if you are new to the stock market or are not spotting them correctly
-They happen when a stock shoots up, jumps and continues to trend up, but will eventually decline
-This can happen with a decline as well (declines, jumps down, continues to decline and then shoots up)
-You want to be cautious with these gaps because they typically happen in a state of panic
#technicalanalysis #stockgaps #stockcharts #commongaps #breakawaygaps
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A Natural Teacher of Concepts
I discovered exhaustion gaps by accident lol. A drunken back to the war room episode led me to hey what happens when it completely breaks back through the gap. Happens same day maybe once or twice a week! Makes me happy that there is a term for it 😅
Had I watched this video Thursday night, ugh. Thank you for explaining exhaustion gaps, very helpful!
Dude, I subscribed just by reading the description below this video! Haven't even watched it yet. Good Job!
Wow Sasha, This video clearly explains the theory and psychology of the traders in each of the gaps, keep the good work going, Thank you so much.
Great teacher, thank you for making this understandable in a simplistic way.
Nicely taught! Thank you for your free teaching. Sending good vibes
Your videos are very informative and helpful, thank you!
I really enjoy the visuals in your videos. Thanks!
Very Good Teacher. Thank you for posting.
Great 👍 💕🙏,,EXHAUSTION GAPS WITH HIGH WAVE CANDLE GAPUP ,gapdown great opportunity to big Money count.
wow i wish i seen this video 4 years ago. thank you my brother👍✌
It's never too late to start!
Love your videos, truly the best on the Tube, thank you for helping others.
You are more than welcome! Thank you so much for watching
Nice simple and straight to the point❤️
wonderful explanation!
This is a good video primer on gap up for GAP plays. I would of liked to have seen more comments on relative variables that go into your decision process. Variables like precursors, time, volume, sizing relative to type of Gap, percentages. Also when not to play position. Over all little to bare bones wiki definition.
Thanks .. very nice piece of information for intra day strategy
I was struggling to understand this topic and fortunately found your video! you nailed it! thank you
Wonderful to hear. Thank you so much for watching
Thanks Sasha
Hi Sasha...love the videos and the clarity of your presentation(s). Could you explain or do a video on how gaps might be potentially traded. You mention in this video the breakaway and runaway gaps are good to trade, but don't provide further detail on how they might be traded.
Thanks its very helpful😊
Superb explanation sirr
I think Brakeaway gabs can also be propelled by stop orders/stop losses that are hit, in combination with market orders.
Great educational video
Glad you think so!
Wow so excited )))
I love gaps! Nice video..
Thank you Sasha
You are welcome. Thanks for stopping by
thanks a lot
Great video, thank you for taking some time to make it!
You are more than welcome
Nice thank you, very good explanation
Glad it was helpful!
Im a new trader and bought during the exhaustion gap. Lesson learned. Thanks
You're more than welcome. Thanks for watching
Great video!!
Great video!! Thanks man.
Thank you so much. I'm glad you enjoyed the video
best explanation. thank you
Wonderful to hear. Thank you so much for watching
I have seen exhaustion Gap occurring on more than one day for downside. People panics next day also and sell their stocks.
thanks that was useful.
Thank you!
You are more than welcome.
Two days of consecutive up gaps on micron, How would you categorize these two gaps?
Thanks
I am confused. What differentiates a runaway gap from an exhaustion gap? Both seem to have similar traits, such as implying the continuation of a trend. Are there certain indicators that can infer whether the gap will lead to a price reversal (exhaustion gap) or a continuation of a trend (runaway gap)?
awesome video! thx
. was wondering if this goes the same for spacs? ya know how they all have a big gap jump from say $10.50 to $13 or $14 on news of the merger but seems they often dont come back down to that $10.50 gap .. does the gap on merger news not apply to this theory ? Thanks in advance for your expert thoughts on this!!
Great Video! Can I use your knowledge in short type of content? Thank you for your answer sir.
Thanks.
you are marvelous , my regards
keep guiding us at every front whether fundamentals or technical, your each and every you tube videos are very educative ..
Been short SHLD since $40, crowded trade but you may want to take a look if you haven't already, many gaps in that 1 yr chart, the last being 2 successive breakaways... thx again
i hit like button to your video. Nice information.
Do stocks gap up because trading before market opens? And gap down because traders dump their positions after market closes or before market opens? I understand why gaps occur (news, press release, earning reports), but I still don’t understand the science behind it. Also, what does it mean to fill the gap?
Hi, can u please make a video on how to trade gaps? Thanks a lot.
nice but how to trade it in pre-market and intraday? what is the strategy to enter and exit?
question if the stocks (Exhaustion Gap) goes down on really bad news , but the decline is very sudden , would it come back up ?
If I enter a positional trade which I plan to hold for 3 months or more, When I execute the trade with a bracket order or with a trailing stop loss, will I be covering my risk against any major gap up or gap down?
.I have a question, on april 6th australian parlimentary elections are going to happen,when market will open on monday will it create a bigger gap in aud pairs.?
what happens if you put a stop loss in your trade and the cap prevents your stop loss from triggering?
do you lose your money? because it keeps going down as if you never put a stop loss in there? or will it trigger with the broker and the broker buys your stock instead of the people in the market
So gaps occur due to extremes in trading volume? So if I understand this correctly, Common- low trading volume (so trend line dissapears because there isnt enough trade volume to create a line.. but once that picks up again and reaches a threshold of some sort, the line reappears at the higher stock price?), Breakthrough, runway and exhaustion- high trading volumes as traders typically fall into the psychology of FOMO(fear of missing out) and try jump on/off board, causing the line to accelerate, reaching another volume threshold that causes the line to dissapear? And Exhaustion gap is just a runaway gap that occurs on the back of a supernova trend?
Please correct me if I am wrong, I'm just trying to internalise this for my own learning :) Sincerely thank you in advance!
ehhm how would you react, if breakaway gap is followed by a runaway gap(both with high volume) in between 2 trading days? will the gaps still be filled though? regards
Good explanations thank you bro❤❤ மிக அருமையான விளக்கங்கள் நன்றி நண்பா❤🎉
Glad it was helpful 😊
I've heard there is some trading between normal trading hours (mostly banks and big companies, buying or selling big positions). Apparently, you can get charts to see the before and after hours trading that explains many "start of day" "apparent" gaps.
Yes you can see premarket and after hours. It's fairly common
Thanks for the video and the whole tips you enlightened us with.
Question: does gaps always get filled? for example gaps that happen in 1 year or two year time? (i use daily chart with candlesticks)
from my understanding common gaps get filled, and they have regular volume, break away gaps as well as runaway do not get filled unless they are followed by an exhaustion gap. Exhaustion gaps will fill the run/ break gaps, but they are telegraphed by a high increase in volume.
Kindly double-check Breakaway Gap, as per my understanding, they can happen either side e.g. on upside from a rectangle pattern.
You mean from a consolidation range to a new support and resistance lines? I think it might be similiar
@@theamazingguy150 Yes :-)
@@gopal1035 from what I know it doesn't have to immediately form a new trend that may take a couple of days. Or it could get exhausted quickly.
@@theamazingguy150 I don't remember. I now follow Oliver Velez, and his 20 and 200 simple moving average concept.
The concepts talked about in this video are foundational to me, but I am not trading based on these now.
Great Video as always. Im just still missing why the gaps necessarily have to be filled. What is the mechanism behind?cheers
Dont gaps also occur due to pre-market trading? You mentioned no trading between gaps.
Wait a common gap is on low volume? Cause it's not very different from a common and runaway when I see this.
Awesome teacher. One question please. Does all the gap need to be filled?
No not all gaps need to be filled. For example if a stock is way past in price at higher levels and it's been already a few years then chances are that Gap below won't get filled
Hey, thank you for this video. It is very helpful. I am interested in buying more stock as the second quarter earning report will be coming out in July for most of my stocks. Should I be looking to buy pre market if the earnings report came out the day before after hours and showed great positivity? I want to buy right before a runaway gap. Thank you.
At that point the news has already been released. You wont have any advantage. However if the Stock continues, you may be able to follow some momentum
Sasha Evdakov: Tradersfly thank you for getting back to me...so when would be a good time to buy...now, before earnings report has come out? I have stocks like PSX and STOR. Please let me know what you think. Thanks!
@@user-wu8ke9ce7q I know this is an old comment, but trading earnings can be risky. Especially in today's market. Some companies have decent/good earnings and beat estimates, but the stock price still goes down for whatever reason, maybe disappointing forecasts. If I do play earnings, I use stop loss orders. But those don't trigger pre or after market, so I watch during those hours with a stop loss price set in my head and if it's hit, then stick to the plan and sell.
are runaways and breakaway gaps closed again ?
Once, I bought a stock, and it went down. Another time, I bought one, and it went up
Yep
You forgot sideways.
Symbol for micron is MU
Hello Sasha, what are the best indicators for gap trading?
+Sasha Evdakov (TradersFly) Thank you for the quick reply! Loved the video! The price and volume indicators any in specific i.e. Bollinger Bands. Also around what time frames are best for gaps charts of 1 min, 5 min, 1 hour, Daily?
Hey Sasha,
If a stock rises in a morning spike then consolidates for the rest of the day, until market close, then gaps up in pre market. Would you still consider that an over extended chart, therefore being an exhaustion gap? Or does the consolidation decrease the chances of a morning panic occurring? Thank you Sasha
Ok then. If the consolidation before close, up ticked with increased volume, then closed and gaped up in pre market the next day. Would you be very cautious, or would you consider that a buy? Or wait for a bounce or pullback and make a move on that?
Sorry to be a pain in the ass.
Thank you
hey, I saw one such gaps and watched your video a I am pretty sure its an exhaustion gap. stock: "SBIN", listed on: NSE, India. I was wondering if you could check it out. It happened on 5th Feb 2021. Great Video btw, keep it up
Exhaustion Gaps are the one to pay attention too.
You should always watch many of the gaps. Not just exhaustion gaps
What do you mean when trades arent made? Its always always trades in premarket and aftermarket
Some people trade options. They don't trade 24/7
If the common gap will be filled, can i take a short position at a high?
Or is it too risky to assume it will eventually be filled?
Thanks!
Atleast mention that all gaps or most gaps do get filled... Breakaway n running away gaps.... Once its made we should wait and watch for price to retract or keep trading it...
👌🏻👌🏻👌🏻👌🏻
Thank you
What’s gonna happen with SPY tomorrow?? What are these gaps telling us
No one knows what's going to happen tomorrow. My crystal ball is in the shop.
true #sunilkumarsaini
Succinct!
Great video and has cleared a lot of my questions... But regarding exhaustion gaps, why would traders sell off when it is going up? Or would the sell off be mostly exit related PT for investors, as opposed to "panic". Thanks again for the great free content, Sasha.
When stocks are going up eventually they get a pull back. When you get this high extension to the upside it's wise to take half your shares off. For example if you had 100 shares in the stock just skyrockets to the moon then it might be wise to cut it to 50 shares or 20 shares on your position size because when it pulls back that's when you can add back the other ones. Remember stocks don't go forever so that's why it's nice to take profits when it's shooting up to the moon
@@tradersflyofficial thanks so much for the valuable info, Sasha! Have taught me SO much. Grateful X10
Are gap must be fill?
They dont all have to be filled
So with all them gaps. They still have to be filled right
In many cases yes. However, sometimes when the stock is too far ahead and priced then it doesn't always have to be filled because enough time has passed by
2024
you missed dead cat bounce formation
The S&P500 has an exhaustion gap just below its maximum peak, then. What will happen when we reach it again? Maybe the prices will go up suddenly?
The market is typically like a rubber band. The more oversold it gets the more likely you get a strong bounce in the same way that the more overbought it is the more likely you'll get it down move in a serious way
@@tradersflyofficial That's right! Thank you. ;)
thank you!
You're welcome!
cool shirt
Thank you
The music at the beginning 🔥
I'm glad you enjoyed the music
Now is the seventhday to keep it holy ,and on the eightday the lord starts the end
Amen
Void
Get more insight on how to deal with gaps .
Thanks for stopping by and thanks for the nice comment.
so of it gaps down just sell
This Video is inaccurate, a Runaway doesn't Mean "up" and a Breakaway gap doesn't Mean the price gapped down, completely inaccurate
thanks a lot