In Fig.1 the middle blue circle indicates a Gap Up price. Gap Up: A Gap Up in price occurs when a candlestick’s lowest price point is above the previous candle’s highest price, leaving a gap or void behind. While explaining the price chart we use some common terms to identify price movement. A trader or analyst will never miss that. A glance at this chart of Nifty (from 29.04.22 to 09.05.22) shows three such gaps, as marked in blue. , these price gaps are visible prominently. We can see why this is visually conspicuous. We can see that the price action is missing there and there is no continuous pattern of candlesticks there. 1 we can see the Gaps are marked with blue elliptical marks. Here is a diagram that shows Gaps in price movement. This lack of continuity left a space on the chart, which was noticed even during the earliest days of technical analysis. During a Gap formation, the price jumps from one point to another without showing continuity, leaving a gap or void behind. Therefore, technical analysis is based more on visual pattern formation of price action than any scientific calculation. Technical analysis charts were created at the beginning by plotting the historical price movement of a stock over a period of time. The reason for visibility lies in the character of charting. The Gaps were probably the earliest noticeable pattern or lack of pattern that were visible to the technical analysts. This article covers the significance of Gap in the stock market and how a trader can take advantage of it. Gap carries big significance to the traders. In the stock market also the Gap is meant as a visible difference between the two.
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