Technical Analysis of Gaps: Identifying Profitable Gaps for Trading
by Julie R. Dahlquist, Richard J. Bauer
Acknowledgments
We first started looking at gaps because they provide useful illustrations when teaching our students how to read stock charts. Students hear a news report that their favorite company just reported earnings, that a company is being sued, or that a well-known company, such as Apple, is launching a new product and ask how these events will affect the price of the stock of the company. These news events often trigger sizeable price moves, frequently on a gap. We can introduce the concept of a gap easily and quickly and then use the conversation as a jumping-off point for broader discussion of the tools of technical analysis.
Gaps repeatedly come up during small talk when people find out that we have a background in technical analysis. ...
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