Ann: CropLogic realTime Lease Finance for Australian Farmers, page-39

Firstly, I should point out that I generally analyse charts using VSA and Wyckoff analysis, which does not particularly subscribe to 'gap theory'.

That said, it is almost impossible to completely ignore gap theory if you are trading the markets over shorter and some medium term time frames.

This question crops up pretty regularly, mostly from those in the market who want "hard and fast' 'black and white' rules, with no 'grey' whatsoever. Sadly for them, the trading markets are generally chock full of 'grey' area........with lots of if's and but's.....so enjoy !!

There are many in the markets who want to place too many individual names on gaps, for me there are just two types, inside gaps (ones with previous trading directly to the left), and outside gaps (ones with no previous trading to the left). They have very different percentage chances of closing. An Inside gap has a very high percentage of closing - up to 90%, whereas an Outside gap has a much lower chance of closing - up to about 50-60%. Note that these percentages also say that 'not all gaps will close', even some Inside gaps will not close at times, for whatever reason.

So for me, it is generally up to the type of gap and the sentiment of the individual stocks market as to whether the gap should close or not.

And now that we have two exchanges trading on the same stocks, it just serves to confuse the analysis even further (even more grey area). I expect it will depend on just how much stock is regularly traded on each exchange, and whether the bulk of the positions opened are 'trading stock' held for shorter time frames, or positions held for longer terms. I feel shorter trading time frames are more likely to subscribe to gap theory and longer term positions less likely.

So finally.......your actual question
If there is sufficient trading on the ChiX exchange, and there are enough shorter term trading positions opened, then the ChiX exchange will likely both open and close gaps. And if the ChiX exchange sees very little trading, and what there is is generally held for the longer term, it is far less likely to obey gap theory.

Just watch the trading carefully, it should offer clear hints, and also look back at previous trading and see what this individual market has done before.

cheers