The importance of breakaway gaps and using breakaway gaps as support and resistance in trading


The importance of breakaway gaps and using breakaway gaps as support and resistance in trading
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11/25/2022




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Breakaway Gap usually occurs after The price formation has been completed. And is often the starting point move significantly For example, the price moved down to test the neckline (after forming a head and shoulders pattern). Pronounced Or in case the price breaks down the major uptrend line, this type of gap is also called a breakaway gap. Beginning of a significant decline.


However, it is worth noting to consider whether such a gap is significant. (or is it a fake signal) should use the volume to help determine because if it's a real signal The volume is quite thick. Also, to ensure that this is a real breakaway gap, price action will not be able to close the gap. With price movements in reverse There is a possibility that the signal is a fake signal.


In addition to the above Some traders are probably thinking that this breakaway gap will serve to Is it support and resistance? The answer is yes, because the breakaway gap during the uptrend will act as support If the market is declining, on the other hand, the breakaway gap in the downtrend. Will act as resistance If the market rebounds.

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