11/29/2023 0 Comments Stock chart gap fill![]() For example, the below chart shows how an overbought RSI signal can be used to enter short after an exhaustion gap. Traders can use tools such as the Exponential Moving Average and RSI to ascertain key price points and inform their decisions. For example, having detailed knowledge of a given company and its operations can help a trader predict a gap for that stock ahead of an earnings report. If technical or fundamental factors point to the potential for a gap on the next trading day, it may be time to enter a position. Irrational exuberance from less experienced traders can be particularly advantageous for more seasoned market practitioners when it comes to fading the gap, as the volume that causes the gap is often caused by FOMO in trading. Eventually, the price hits yesterday's close, and the gap is filled. Now let's say, as the day progresses, tradersdelve deeper into the company’s presentation deck, see things they don’t like, and start selling. Let’s say a stock gapped up at the open with a higher price than the previous close, on a positive earnings report. ‘Fading the gap’ is when gaps are filled within the trading day they occur. There are a range of gap trading techniques to explore,from fading and predicting gaps to using indicators to help you gauge price action. Trading the gap: Gap trading strategies & tips For example, price reversals seen with exhaustion gaps are likely to be filled as this type of gap signals the end of a price trend.
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