fill the gap $1.90 - $1.945, page-2

Hi Rorkes

Gaps are generally caused by the smart money wanting to take the price up over a resistance level simply because they don't want to absorb the selling that occurs at these levels. If you look at the Lyc chart you can see that that was the case and no accident that the price on that day came back and sat right on that resistance level from above, creating a support level, this was also a way of testing the willing ness of sellers, there was no additional selling and so the sp then takes the path of least resistance and moves up. This is because the price is now above what those previous sellers were willing to sell at and they now wish to hold. What happens after a lot of gaps like this is that the professionals will then take the price up to quickly to where they want it to go, unload to eager buyers and then simply do nothing. Without their support and deep pockets, the sp can't be sustained by the mums and dad investors and the price then stalls and falls back to previous support. Here they will encourage it to fill the gap in order to test any supply that may be lingering and impeding any further good price rises. It also serves to shake weak holders out enabling them to accumulate more of the floating supply at lower prices and then it gets taken up again. This process is repeated over and over and gives us our wave like action as prices move upward.

There are some gaps though caused by unexpected news for example that may never be filled these are breakaway gaps and there are some stocks like BHP for example that just gap all over the place and that's just the way they are due to high volatility at times.

Hope that has made the understanding of what gaps are a little easier. They are not always filled but the probability is good that they will be and therefor present good entry opportunities.

Will LYC's be filled, who knows? It's certainly an area to keep an eye on though, and they can also sometimes just be partially filled.

Cheers