Decoding stock market gaps: A comprehensive guide
Decoding stock market gaps: A comprehensive guide

Decoding stock market gaps: A comprehensive guide

Explore the dynamics of stock price gaps – a window into market sentiment and a trader's toolkit for strategic decision-making.

Prajwal Wakhare Article rating: 3.3

In technical terms, there are two main categories of price gaps: up gaps and down gaps. An up gap materializes when the lowest price aftermarket closure is higher than the highest price from the preceding trading day. Typically interpreted as bullish signals in technical analysis, up gaps indicate positive market sentiment. On the other hand, a down gap occurs when the highest price aftermarket closure is lower than the lowest price from the previous trading day. Down gaps are generally perceived as bearish indications, signalling negative market sentiment.

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