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Video - why you absolutely need to know why gaps are closed

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Not applicable
Gaps and the way they close will give you more insight into market psychology than any other market phenomenon...they go against logic, and conventional wisdom and are brilliant at illustrating how professionals make money from amateurs....I guarantee that if you have not already thought about gaps that an understanding of how they work will be the single most useful insight....http://www.screencast.com/users/Chartist/collections/Default/media/1e9fe2ca-52a8-4c6c-bd99-8fb717158...
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40 REPLIES 40
TraderSteve
Frequent Contributor
Chartist I just got to say thanks for the heads up with your gap trading video and comments. Brilliant.
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Not applicable
I use gaps in candle charts for entry and exit points.Have found that they are very accurate especially on intradday charts. Please do rememebr guys that a gap can however take weeks or even months to close on end of day charts.
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CE
Super Contributor
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sax
Frequent Contributor
Chartist, do you use igindex.com for your charts? How did you apply did you have to post your details etc to them?
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Not applicable
Sax, I use IG for live Futures prices for the rest I use Amibroker...yes you have to post them copy of your ID etc...thats all...they are amazingly efficient and their long term charts have very good functionality, great for commodities, currencies etc
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sax
Frequent Contributor
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sax
Frequent Contributor
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Beep_Beep
Super Contributor
Sax - best thing I ever did was register with Igindex. They have got all the shares and futures you require - worth it. Thanks Chartist.
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Beep_Beep
Super Contributor
Looking at your video and the opening today - If I look at the day befores opening the gap was closed - same as today. What causes that gap to open and close. op
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Not applicable
did you listen to the audio? impulse buying....people being forced to buy through stops or short covering or fools who chase after a price....because this kind of buying has no legs (i.e these people are not bulls) the buying fades and the gap closes.. other way round for a gap down.....
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Wizard
Super Contributor
Every gap has to be closed, but the magnitude by which the gap opens up and closing afterwards remains the uncertain part and where the big surprises come. I had a price target on DRD to 500 few weeks ago based on fib 61.8 and hell that thing is trading at 450 at the moment. It might even fill the whole gap and form some kind of a double bottom at 400!
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DavidG
Contributor
Fantastic stuff, Chartist. Thanks a mil.
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john_1
Super Contributor
Thanks Mate, good to know I was not one of your fools yesterday. I went short at about 2pm but then bailed, lost my nerve but having watched your vid I will be more resolute next time, If I make money I may even buy you a beer.
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Not applicable
you just had a nice short opportunity at 26500....
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john_1
Super Contributor
Just sold my longs at that level, quick 75 points in the bank. Now I wait and see. 25 more points and I am done for the day.
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Not applicable
Watched the vid over me morning coffee a few minutes ago. Not sure I agree with it ( I might be missing something, admittedly) - to use today's eg - 26500 is by my reckonning resistance - a pullback is inevitable at that level. I only use end of day, but based on intraday levels, which I spose comes to the same thing. Might be interesting to compare how levels of support & resistance correspond with gaps.
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sax
Frequent Contributor
are the charts live 5min, or is it only history?
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john_1
Super Contributor
G I think that a gap up that breaks a resistance should be seen as bullish. A gap that is based on overnight markets leaves many large market players behind and as such the market very kindly moves back to pick them up, (remember your GFI exit). and these gaps are dangerously confused with a bullish break.
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Not applicable
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