Exhaustion gaps are typically the most likely to be filled because they signal the end of a price trend, while continuation and breakaway gaps are significantly less likely to be filled since they are used to confirm the direction of the current trend.
Are breakaway gaps always filled?
A breakaway gap occurs when prices are breaking out of a range on significant volume, developing a new trend. As a result of a new trend bringing in new market participants and catching many off-sides, this gap generally does not fill and sees upside follow-through relatively quickly.
How do you trade a breakaway gap?
How To Trade A Breakaway Gap?
- The market moved sideways, forming a consolidation pattern.
- Enter a long position at the breakaway gap day close.
- These are possible initial stop-loss levels for this breakaway gap setup.
- You can then use this subsequent swing low to tighten your stop-loss.
