last week and the week a head!, page-619

Hey Dom,

You said, "My definition of a gap, which aligns with popular sites including Investopedia.

You must have looked at a lot of popular sites then??

If you are having trouble with interpretation, try these definitions which are clear what a gap represents, these definitions are from popular sites.

These are written concisely so there is no interpretation needed as to what a gap is:

Here is Stockcharts definition
"A Full Gap Up occurs when the opening price is greater than yesterday's high price." 2.5 is > 2.4
"A Full Gap Down occurs when the opening price is less than yesterday's low."

Here is Gartleys GAP theory:
price gaps — when successive price bars fail to overlap  - 2.4/2.5 fails to overlap

Incredible Charts definition"
Gaps occur when the lowest price traded is above the high of the previous day or, conversely, when the highest price traded is below the previous day's low.


From Swing trade"

Here is an example:
Let's say that on Tuesday, Microsoft closes at $26.57. After the close they come out with their earnings report. They report higher than expect earnings that causes excitement among investors. Buy orders come flooding in. The next day Microsoft opens at $27.60. Since there were no trades between $26.57 and $27.60 this will create a gap on the chart.
The price must meet the Tuesdays high of $26.57 to close the gap.

From Share Market School:
In simple terms-a gap occurs when the current bar opens above the high or below the low of the previous bar. On a price chart, a space appears between the bars indicating the gap.

From Learning Markets:
Gaps occur when the market opens a session higher than the previous high or lower than the previous low. Gaps look like a blank space in a bar or candlestick chart between two trading sessions. They are most common in markets that close and do not trade overnight.

Cheers