Price Gap Examples - Bitcoin Futures

10 בדצמ׳

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█ Three Types of Gaps
There are three general types of gaps:

1. Breakaway Gap
   
2. Runaway (or Measuring) Gap
   
3. Exhaustion Gap
   

█ 1 — The Breakaway Gap
The breakaway gap usually occurs:

• At the completion of an important price pattern.
  
• At the beginning of a significant market move
  

Examples:

• After a market completes a major basing pattern, the breaking of resistance often involves a breakaway gap.
  
• Breaking major trendlines signaling a reversal of trend may also involve this type of gap
  

Key Characteristics:

• Heavy volume often accompanies breakaway gaps.
  
• They are typically not filled (or only partially filled).
  
• In an uptrend, upside gaps act as support areas on subsequent corrections.
  
• A close below the gap is a sign of weakness.
  

█ 2 — The Runaway or Measuring Gap
The runaway gap forms:

• Midway through a trend (uptrend or downtrend).
  
• Indicates the market is moving effortlessly, usually on moderate volume.
  

Key Characteristics:

• In an uptrend, it signals strength.
  
• In a downtrend, it signals weakness.
  
• Acts as support or resistance during subsequent corrections.
  

Why "Measuring" Gap?

• It often occurs at the halfway point of a trend.
  
• By measuring the distance the trend has already traveled, the probable extent of the remaining move can be estimated by doubling the amount already achieved.
  

█ 3 — The Exhaustion Gap
The exhaustion gap appears:

1. Near the end of a market move.
   

Key Characteristics:

• Occurs after objectives have been achieved and other gap types (breakaway and runaway) have been identified.
  
• In an uptrend, prices leap forward in a final push but quickly fade.
  
• Within a couple of days or a week, prices turn lower.
  

█ Conclusion

• By understanding the types of gaps and their characteristics, traders can better interpret market signals and anticipate potential trends or reversals.
  

█ Source:
Murphy, John J. Technical Analysis of the Financial Markets: A Comprehensive Guide to Trading Methods and Applications. New York Institute of Finance, 1999. Chapter 4, "Price Gaps," pp. 94-98.