Gap, that is also known as the price gap, there is a disconnect between the highest price refers to the exchange rate fluctuations in the fast curves and the lowest curve. In the foreign exchange market, gap refers to the phenomenon of the market which price of the transaction price jump up and down. Clear upward trend is an important symbol of the beginning of the upward trend, the larger trend upward gap indicates that more clear. There are several forms gap:
1. Generality Gap
Not much help to predict trends, you can ignore it. It always happen when there are few trade or the narrow amplitude.
2. Breakthrough Gap
Generally occurs when trading volume is large, the important price has been breakthrough or new large fluctuations began. When the exchange rate is extremely erratic and away from the original price, it shows the real breakthrough began. Therefore, the gap more erratic the more intense volatility.
3. Substained Gap
Continuous occurrence of two or more times in order to reflect market trading volume in the middle of the smooth development. Rising (or falling) trend, these gap will be the support (resistance) area in the future market adjustments. Because this gap group is generally appear in the middle of the whole trend, it can trade with the rule that it will double amplitude along the rise (or fall) direction in the future rise (or fall).
4. Expendable gap
Expendable gap, also known as decline gap, generally appear at the end of the trend, it is also the forebode of rapid rise (or fall). So the market will getting better in a subsequent turn. The gap always appear after the Generality Gap and the Breakthrough Gap is appeared, and when it is filled, the trend is on the decline of the break, then should take active measures to avoid losses.