1. GAPS

3. DEFINITION Gap UP ………….High t < Low t+1OR
Gap DOWN…..…Low t > High t+1

5. GAPS
COMMON GAPS
BREAKAWAY GAPS
RUNAWAY GAPS
EXHAUSTION GAPS

6. COMMON GAPS OCCURS WHEN MARKET IS IN A TRADING RANGE
RARELY SIGNIFIES ANY MAJOR CHANGE IN THE MKT.
PRODUCT OF A SURPRISE
GETS GENERALLY FILLED

8. BREAKAWAY GAPS USUALY OCCURS AFTER A CONSOLIDATION PHASE
GAP WILL ACT AS SUPPORT AND RESISTANCE ONCE
THE MARKET MOVES AWAY FROM IT
WILL FUEL EVEN MORE AS TRADERS COVER THEIR
SHORT/LONG POSITIONS
IDEAL TO PLACE STOP OREDRS

10. RUNAWAY GAPS TRADERS WANT TO JUMP ONBOARD AND RIDE THE TREND
VERY LITTLE OR NO PULLBACK TO ENTER THE TREND
SEVERAL GAPS OCCUR
PRICES ARE PUSHED UP/DOWN BY SHORT COVERERS

11. RUNAWAY GAPS

12. EXHAUSTION GAPS REPRESENTS END OF A STRONG TREND
HIGH VOLUME + LARGE DIFERENCE BETWEEN PREVIOUS
CLOSE AND CURRENT DAY'S OPEN
HIGH VOLATILITY
CLOSES LOWER THAN OPENING PRICE

13. EHHAUSTION
GAP

14. TRADING THE GAP RUNAWAY GAP
IF THERE IS A GAP UP AND THE CLOSE IS HIGHER THAN THE OPEN
AND IS IN THE TOP HALF OF THE PRICE ENTER A LONG POSITION
IF THERE IS A GAP DOWN AND THE CLOSE IS LOWER THAN THE
OPEN AND IS IN THE BOTTOM HALF OF THE PRICE ENTER A SHORT POSITION

15. EXHAUTION GAPS MARKS THE END OF A TREND AND PROVIDES
OPPORTUNITIES TO TRADE AGAINST THE TREND
SELL THE UPGAPS AT THE OPEN
BUY THE DOWNGAPS AT THE OPEN
EXIT ON THE CLOSE
USE A 5-POINT STOP LOSS

17. DOUBLE TOPS THE FAILURE RATE OF A DOUBLE TOP IS 65%, BUT WAITING FOR A
CONFIRMATION CUTS IT TO JUST 17%

18. CONFIRMATION
POINT

19. DOUBLE BOTTOMS IN A DOUBLE BOTTOM , BOTTOMS CLOSE TOGETHER PERFORM
BETTER

20. BROADENING FORMATIONS
A PARTIAL DECLINE FROM A BROADENING TOP SIGNALS A UPWARD
BREAKOUT 86% OF THE TIME

22. SYMMETRICAL TRIANGLES
PULLBACKS FROM SYMMETRICAL TRIANGLES ARE MORE LIKELY
TO OCCUR AFTER A HIGH-VOLUME BREAKOUT

24. TRIPLE BOTTOMS THE THIRD DOWN OF A TRIPLE BOTTOM PREDICTS PERFORMANCE.
WHEN THE 3RD LOW IS BELOW THE ABOVE BOTTOM
IT IS MORE LIKELY TO OUTPERFORM

26. HEAD & SHOULDERS