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BREAKAWAY GAP


Breakaway Gap

05/08/00 03:01:09 PM
by Jason K. Hutson

A breakaway gap usually occurs at the beginning of a significant price pattern. You can expect to find them when a security is breaking out of a trading range or when it is breaking a trendline.

Security:   N/A
Position:   N/A

Breakaway gaps are accompanied by a substantial increase in volume. Since they indicate the beginning of a price pattern, the probability of the gap fading is low. The resistance level that was broken now becomes the support level.

The price movement initiated by the breakaway gap will remain strong if prices remain above the new support level. If, however, they drift below it, you can expect a weakness in the market.

 



Jason K. Hutson

Traders.com Staff Writer. Enjoys trendlines, support and resistance, moving averages, RSI, MACD, ADX, Bollinger bands, parabolic SAR, chart formations, and volume analysis.

Title: Industrial Engineer
Company: Technical Analysis, Inc.
Address: 4757 California Ave SW
Seattle, WA 98116
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E-mail address: JasonHutson@Traders.com

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