The gaps are mainly divided into upward jumping gaps and downward jumping gaps. The upward gap refers to the gap between the lowest price of the day and the highest price of yesterday. The downward gap refers to the gap between the highest price of the day and the lowest price of yesterday. The gap in a bull market must be filled, and it is not absolute. The gap is only a psychological influence of people and needs to be analyzed and treated specifically. However, consecutive short gaps indicate that the overall market is rising too quickly, and there is generally a possibility of technical correction. How do we view the stock gap and how should we view the emergence of a stock gap? The following 8 points should be memorized by investors.
1. The gap must be filled. In theory, gaps will always experience a phenomenon of replenishment. Generally speaking, if a gap is not closed by the next secondary market, it may be replenished by the next intermediate market. If the time is longer, it will be closed by the next original trend, which is just an early replenishment and a late replenishment.
2. The emergence of the gap from breakthrough to depletion occurs sequentially in the market, reflecting the mutual transformation process of long and short forces from generation to strength to extinction in the market.
3. A gap is a strong trend signal, with an upward gap indicating a strong upward trend; Jumping downwards indicates a strong downward trend. The more gaps appear during an uptrend or downtrend, the more it indicates that the trend is approaching its end, suggesting caution in trading.
4. In a rising market, if there is a continuous upward gap, it indicates that the market is entering its final sprint stage; In a downtrend, the market has experienced three consecutive downward gaps, indicating that the short-term downward momentum of the market has been depleted.
5. Consumption and regular gaps are generally filled in the short term, while breakthrough and sustained gaps may not be filled. Therefore, the significance of analyzing breakthrough and sustained gaps cannot be ignored.
6. With one drumbeat, the energy fades; with three drumbeats, it exhausts; with three jumps, the energy runs out. In an upward trend market, there are generally three or more gaps, usually hitting a peak or undergoing a correction. In a downward trend market, there are usually three or more gaps, usually hitting a bottom or rebounding.
7. Jumping cross star. If it appears in a low price area with a clear downward trend, it is generally a medium-term buy signal, and the stock price is expected to form a reversal, leading to a wave of medium-term market trend; If it appears in a high price area with a clear upward trend, it is generally a medium-term sell signal, and the stock price may form a downward reversal.
8. The gap is not only an important technical resistance level during the upward trend, but also an important technical support level for the downward adjustment.