Learn these gaps and you won't lose anything anymore
1. Reversal gaps indicate a radical change in direction:
- A bearish reversal gap shows selling dominance after a peak.
- A bullish reversal gap reflects a shift to demand after a trough.
2. Weekend gaps can be traps:
- They occur due to surprising news, and are often filled later.
3. Momentum gaps accelerate the current trend:
- A bullish gap supports a strong rise.
- A bearish gap reinforces a sharp decline.
4. Liquidity gaps are a professional's game:
- They are used to lure traders before a price reversal.
5. Filled gaps reveal deception:
- A false gap appears and then disappears, like a trap for traders.
6. Benefit? Context analysis:
- Gaps with high trading volume mean strong confirmation.
- Isolated gaps carry a risk of reversal.
7. Remember: Not all gaps are the same:
- Some indicate golden opportunities, while others are false signals.
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