Gaps Filled or Unfilled
The issue of “filling” a gap determines not only the strength and meaning of the gap itself, but also what will occur next. Candlestick indicators (gap filled and tasuki gap, which is unfilled) both are defined as continuation signals. So when one of these signals occurs close to resistance (in an uptrend) or support (in a downtrend), it usually indicates that the current trend will continue.
These indicators need confirmation, however. Even with strong indicators in the form of gaps filled or unfilled, the signal itself may be misleading. For example, in Figure 10.1, price breaks through below support and then evolves into a gap filled formation at the very bottom.
Figure 10.1 Filled gap (Chart courtesy of StockCharts.com ...
Get A Technical Approach To Trend Analysis: Practical Trade Timing for Enhanced Profits now with the O’Reilly learning platform.
O’Reilly members experience books, live events, courses curated by job role, and more from O’Reilly and nearly 200 top publishers.
