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Trading Gaps

Recs

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December 31, 2010 – Comments (0)

Breakaway Gap Here we see a nice consolidation and finally the buying becomes strong enough to gap the price up.  From there we see a nice run.  This gap takes a non-trending stock and moves it to a trending stock.  As a confirmation of the breakaway gap we want a nice spike in volume.

The island reversal is bit of a rare pattern so when it happens it makes a strong signal to trade on.  A gap is created, it moves to sideways trading, and then it gaps in the other direction and continues to trend that direction. 

Lets show some examples:

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