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1 Сентябрь 2009

Classification GAP

You may have often noticed that at the price charts from time to time there are price breaks, which are called GAP. Such breaks - not uncommon in the foreign exchange market, so every trader must know how the nature of gaps, and their classification in order to better predict the further development of the situation. Classification GAP carried by different criteria, the most notable of which are: the nature of, the magnitude of the gaps and the position of the gap relative to other elements on the price chart.


Feature, which is characterized by the FX market is fairly frequent occurrence GAP right after the weekend, because at that time trading in the forex market is not conducted, and on weekends can get different news, which sometimes have a strong impact on the currency market. In addition, some analysts explain the emergence of price gaps on the chart is the fact that on weekends, many dealing centers do not cease to trade. With this exchange rate is exposed to, and after the weekend the price at which the forex market was closed on Friday, will be significantly different from the price at which the forex market opens on Monday.

But, in addition, GAP often appear in the foreign exchange market and on weekdays, when the trade is conducted as usual.

Thus, the classification of GAP

1. Space «At the break»

This type of discontinuity, usually appears in the middle of the trend movement. In this case Forex market is characterized by high activity, then there is a pronounced price movement. This movement is observed to break and after. In most cases, this type of discontinuity is accompanied by a significant increase in volume. But the main feature of measuring the type of discontinuity is that it is very informative. After analyzing this type of gap, you can get an idea of where the market will move and how long such a movement. Home remarkable feature of this type of discontinuity arises from the fact that it appears exactly in the middle of the trend. This situation will give us information on subsequent goal.

Using information about fracture
After the appearance of the gap requires a detailed study of its structure and size. You must measure the distance from the beginning of the current trend, before the break. Measured in points. After that, you want to pave the same distance from the gap. Thus, we obtain an approximate picture, where the most likely to end trending movement.

2. Standard gap

This type of discontinuity appears in a quiet market, when a fairly long time forex market is characterized by a lateral trend. But this type of price gap can not fully be used to predict the movement of the currency market, as the standard GAP fairly short duration. Price, after making a significant leap in a short period returns, so this type of discontinuity maloinformativen and focus on forecasting the market according to the price gap is not recommended. The average size range, which varies the type of a gap - 20-30 points.

3. The price gap «a spent»

This type of discontinuity, which is also characterized by the FX market can be regarded as a positive or negative side. The thing that breaks is poured dangerous for traders who rely on the analysis of trade measurement gaps. But the positive characteristics of this type of price gap is that it appears after measuring the gap appears. Only the direction of another.

This situation will tell you that the measuring gap is in this case to work and want to rotate the position in the opposite direction - towards the gap is poured. The main drawback of this type of discontinuity is that it is not helpful, because with it you can not determine the probable course of the price range.

4. Gaps «a breakthrough»

This type of discontinuity in the increasingly occurs when a price range of motion in the corridor. But from other types of breaks this gap has a number of significant differences. First of all, this difference lies in the fact that during the movement of value range, when a given type of a gap, it goes beyond the boundaries of the corridor, then there is a breakthrough of one of its sides. The second distinguishing feature is that at this time on the market there is a significant increase.

When an impulsive wave, which pushed for the formation of a gap, the gap will lead beyond the trading range, then coupled with the increasing volume of trades, the majority of forex market participants are beginning to support a given motion, so that there is an even greater impetus to the price range in a given direction. So, in other words, this factor influences that formed a new trend in the direction of the breakout. Filling the gap occurs after a long time. Usually, after the end started trending movement.

It is because of the possible long-term change of trend data price breakouts very useful for the confirmation signal a change in trend or the beginning of a powerful movement in this direction.

As you can see, all the price breaks fairly easily identifiable on the price chart. The main thing - pay attention to the features that characterize the FX market during any of the above price gaps. Using data that can be obtained by analyzing any of the gaps, will allow you more confident to trade for short, and at long intervals. But in most cases, price breaks, which is famous for the FX market, is regarded still as an additional signal that you made the right decision.