Hidden Gaps
Another way in which gaps develop is through “hidden gap” formations. These meet the definition of gaps in the sense that the closing price of one session gaps to the opening price of the next session. However, due to an overlap of the day’s trading range, these are not visible. The more visible gaps in which a visible space exists are only part of the gap universe. In fact, gaps are common, and an examination of just about any price chart reveals this. Hidden gaps can occur frequently.
There are six forms of hidden gaps, and these are illustrated in Figure 10.6. Note that in each case, the real bodies of the two sessions always overlap, which shows why these are hidden.
Figure 10.6 Hidden gaps (Chart prepared by the author)
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