The implication of the signal is that an upward trend may be about to end soon. This signal reflects a significant shift from buying to selling activity that usually coincides with falling demand for a stock. An exhaustion gap is a technical signal marked by a break lower in prices (usually on a daily chart) that occurs after a rapid rise in a stock's price over several weeks prior.The stock doesn’t recover by the open of the next day. In other words, there was no trading, defined as an exchange of ownership in a security, between the price point where the runaway gap began and where it ended. A 100 stock reports subpar earnings almost immediately, shares fall 10 in after hours trading. A runaway gap, typically seen on charts, occurs when trading activity skips sequential price points, usually driven by intense investor interest. A breakaway gap could also occur out of another type of chart pattern, such as a triangle, wedge, cup and handle, rounded bottom or top, or head and shoulders pattern. When the price breaks out of a well-established trading range via a gap, that is a breakaway gap.
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