Gaps by Thom Hartle and Melanie F. Bowman
ARTICLE SYNOPSIS ...Gaps by Thom Hartle and Melanie F. Bowman
Occasionally, trading leaps over a range of prices to reach a new level, leaving a blank space in the price chart. If these spaces are wider than the usual 1/8- to 1/2-point difference in bids, they imply that significantly more is yet to come. When chart gaps are no wider than the usual difference between bids, on the other hand, they provide no information.
Gaps appear most frequently in daily charts, where every day is a new opportunity to trade higher or lower than the previous day's high or low. A monthly chart, in contrast, offers a very narrow...