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发表于 2008-2-10 15:59
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Gaps
Gaps [转贴 2007-07-21 17:52:35 ] 发表者: 齐子非
Gaps are one of the most easily recognisable technical indicators. A gap is simply an empty spot formed on a price chart when prices do not overlap the previous bar’s price action. This is a useful concept to keep in mind because it helps to explain some of their technical consequences. Sometimes market psychology changes overnight or over a weekend and that change in psychology can force prices to open and stay above or below the previous day’s range.
Gaps on daily and intra-day charts are most reliable. They can appear on longer-term charts such as weekly charts, but are rare. Gaps on monthly futures charts are very rare because they generally are constructed to avoid gaps caused by contract changeover.
Figure 297: Price Gaps where the market opens at a significantly different level to previous price action, causing empty spots in the chart.
Bullish Gaps on daily bar charts are produced when the lowest price at which a stock, commodity, or futures contract is traded on any one day is higher than the highest price at which it traded on the preceding day.
Bearish Gaps appear when the highest price of one day that a market is traded at is the lower than the lowest price of the preceding day.
When the ranges of any two such days are plotted, they will not overlap or touch the same horizontal level on the chart. There will be a price Gap between them.
For a Bullish Gap to develop on a weekly chart, it is necessary that the lowest price recorded at any time during the week be higher than the highest recorded price during the previous week. This can happen, but not as often as on daily or intra-day Gaps.
(Bearish Gaps occur when the highest price of the week does not reach the lowest price achieved during the previous week.)
Monthly chart Gaps are rare in actively traded markets. Their occurrence is confined almost entirely to those few instances where a panic decline or panic buying spree commences just before the end of a month and continues through the first part of the following month.
In general technical analysis, Gaps may serve one of three purposes:
They are used to spot the beginning of a move;
Gaps are used to measure a move;
And Gaps are used to signal the end of a move.
And there are four types of Gaps:
Common or temporary gaps;
Breakaway gaps;
Measuring or runaway gaps;
And Exhaustion gaps.
Common or Temporary Gaps The most frequently occurring Gap is the Common Gap… (Obviously!). When this Gap occurs because of a slight change on psychology, traders expect it to soon be filled. Once a gap is filled, it no longer has significance in terms of analysis or forecasting.
A Common Gap tends to occur frequently in a trading range or price congestion area. All of the congestion formations which I have illustrated (Wave 2’s, Wave 4’s, Flags, Triangles, etc.) regularly contain Common Gaps. This is because activity in these patterns tends to be concentrated near to the top and bottom edges of the pattern, i.e. the formation’s trendlines.
While a market is in between a congestion’s trendlines, it is in much of a "no-man’s land". Therefore, it is easy to see why Gaps develop frequently within such areas.
Figure 298: Common Gaps occur in price congestions or trading ranges.
Because this is the most common type of gap, it is the one I have found to be quite valid. It obeys the rule that "gaps are often filled". When I see a gap in a congestion area, I will often wait for prices to come back and "fill the gap" rather than enter a trade.
The forecasting significance of Common Gaps is practically nil. They have some use simply because they help to recognise an area pattern. That is, they imply that the congestion formation is in the process of construction.
In congestion areas, there may be as many as 5 or 10 Gaps.
If the market fails to fill this gap after a couple of weeks, this confirms a Breakaway Gap (see below) and one can then think about riding the trend.
Breakaway GapsA Breakaway Gap appears in connection with a price congestion area, but it develops at the completion of the formation in the move which breaks prices away. Any breakout through a horizontal pattern boundary, such as the top of an ascending Triangle, is likely to be attended by a Gap.
In fact, it is safe to say that most of them are.
Figure 299: Breakaway Gap after a congestion area.
Continuation, Runaway and Measuring GapA Continuation or Runaway Gap is less frequent in its appearance. But they can be significant in that they can provide some clues to forecast a probable end of the trending move. For this reason Continuation or Runaway Gaps are sometimes called Measuring Gaps.
As opposed to the Common Gap or the Breakaway Gap, which form in or around an area of congestion, a Runaway Gap is not associated with area patterns. It occurs in the course of rapid, near-vertical advance or decline.
Supposedly, the Runaway Gap occurs around the halfway point of a price move, between the beginning of the trend move (e.g. the start of Wave 1) and the end of the move (e.g. the end of Wave 5). Therefore, measuring the height of price action between the start of a trend and the Runaway Gap two can predict the end of the trend.
However, although this idea can HELP to forecast the length of a trend, I have found that this technique does not work as consistently as some of my other forecasting techniques. But if the Gap-measuring method predicts a similar end as my other techniques, it adds weight to the likelihood of a top/bottom at this price.
Figure 300: A Runaway Gap can be used to help forecast an objective for the end of a trend. Measure from the start of the trend to the Runaway Gap and project this from the Runaway Gap (i.e. the Runaway Gap is at the halfway point of the move). In this example, the market fell lower than the Gap-measuring technique forecast. Note how the fall from around 39 contained 3 waves all of around the same length – a more reliable method.
Exhaustion GapThe Breakaway Gap signals the start of a move; the Runaway Gap marks its rapid continuation (supposedly around the half-way point of the move); an Exhaustion gap shows signs of the market sputtering to an end.
Exhaustion Gaps are associated with rapid advances or declines at the end of price trends.
Though prices may go higher after an exhaustion gap at the top, the rally will not last long before the market dies.
Figure 301: Exhaustion Gaps (red rectangles) show a final strong burst to a new high or low. If the gap is filled, it is obviously NOT a Runaway Gap and is likely to be an Exhaustion Gap.
The Island ReversalThe Island Reversal pattern is uncommon and in itself is not of great significance in the sense of denoting a long term top or bottom. But it does, as a rule, send prices back for a complete retracement of the minor move that preceded it.
An island usually occurs at the end of an Exhaustion Gap and could be viewed as forming its own narrow trading range at the top of the reversal. The island can last for only a single day, in which event, it usually takes the shape of one of the reversal bar shapes given above (Test, Key Reversal, Shooting Star).
Or the Island may be made up of several days or weeks of minor fluctuations of a congestion area. The Gaps at either end of the Island occur at approximately the same level so that the whole area stands out as an Island on the chart, isolated by the Gaps from the rest of price action.
The reasons why Islands develop – in other words, why Gaps do repeat at the same price level – are usually because prices can move and repeat through a wide range where little or no orders have been placed in the past; where previous owners have no vested interest and where there is no support/resistance from previous price action.
Figure 302: Some Island Reversals which occur as part of an Exhaustion Gap. Once the gaps have been filled, it is then proved that the gap was not a Runaway Gap. Therefore, it is likely that the trend has come to an end and a reversal has taken place.
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How to trade gaps on a stock chart？
Are all gaps created equal? Nope. There are really only two significant factors to consider when trading gaps.
You have to be able to identify if the gap is caused by professional traders or amateur traders. There is a big difference between the two!
Wait a minute...let's back up a second...
What is a gap? A gap is defined as a price level on a chart where no trading occurred. These can occur in all time frames but, for swing trading, we are mostly concerned with the daily chart.
A gap on a daily chart happens when the stock closes at one price but opens the following day at a different price. Why would this happen? This happens because buy or sell orders are placed before the open that cause the price to open higher or lower than the previous day's close.
Here is an example:
Let's say that on Tuesday, Microsoft closes at $26.57. After the close they come out with their earnings report. They report higher than expect earnings that causes excitement among investors. Buy orders come flooding in. The next day Microsoft opens at $27.60. Since there were no trades between $26.57 and $27.60 this will create a gap on the chart.
Let's look at a chart:
You can see on the chart above that the stock closed at one price and then the next day the stock "gapped up" creating a price void on the chart (yellow circle).
Filling The GapIn Japanese Candlestick Charting gaps are referred to as windows. When we say that a stock is "filling a gap", the Japanese would say that the stock is "closing the window".
Sometimes you will hear traders say that a stock is "filling a gap" or they might say that a stock has "a gap to fill".
Are you wondering what the heck they are talking about?
They are talking about a stock that has traded at the price level of a previous gap. Here is a chart example:
In this example, you can see that the stock gapped down. A few days later it rallied back up and filled in the price level at which there were previously no trades. This is known as filling the gap.
Sometimes you will hear traders saying that "gaps always get filled". This just simply isn't true. Some gaps never get filled, and sometimes it can take years to fill a gap. So I really don't even think it is worth debating because it offer no edge one way or another!
Types Of GapsTraders have labeled gaps depending on where it shows up on a chart. It isn't really necessary to memorize all of these patterns but here is the breakdown so that you can impress your trading friends.
- Breakaway Gaps - This type usually occurs after a consolidation or some other price pattern. A stock will be trading sideways and then all of sudden it will "gap away" from the price pattern.
- Continuation Gaps - Sometimes called runaway gaps or measuring gaps, these occur during a strong advance in price.
- Exhaustion Gaps - This type of gap occurs in the direction of the prevailing trend and represents the final surge of buying or selling interest before a major trend change.
Ok, now we are going to get into the really good stuff...
Professional vs. Amateur GapsWhen you are looking at gaps on a stock chart, the most important thing that you want to know is this:
Was this gap caused by the amateur traders buying or selling based on emotion?
Or...
Was this gap caused by the professional traders that do not make emotional decisions?
To figure this out you have to understand this one important concept first. Professional traders buy after a wave of selling has occurred. They sell after a wave of buying has occurred.
Amateur traders do the exact opposite! They see a stock advancing in price and are afraid that they will miss out on the move, so they pile in - just when the pro's are getting ready to sell.
Here is an example of a gap caused by amateur traders...
See how this stock gapped up after a wave of buying occurred? These amateur traders got emotionally involved in the stock. They piled in after an already extended move to the upside.
These traders eventually lost money as the stock sold off over the next few weeks. Notice how the stock eventually did go back up - but only after a wave of selling occurred (professional buying).
Here is another chart:
See how this stock gapped down after a wave of selling occurred? These amateur traders got emotionally involved in the stock. They sold after an already extended move to the downside.
Ok, so let's break this down, shall we?
- If a stock gaps up after a wave of buying has already occurred, these are amateurs buying the stock - look to short.
- If a stock gaps down after a wave of selling has already occurred, these are amateurs selling the stock - look to go long.
These types of gap plays usually provide great opportunities because they represent and extreme price move.
Well, there you have it...a short primer on trading gaps.
Gaps can provide nice swing trading profits but they can be a little more tricky to trade. The advantage is that you can sometimes make big profits, quickly, and with a little less risk...
...something every trader should strive for.
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