A Gap Up is when a stock opens at a higher level than the previous day’s high. Gaps are areas on a share price chart where the price of a stock moves sharply up or down, with little or no trading in between.
Gaps are areas on a chart where the price of a stock (or another financial instrument) moves sharply up or down, As a result, the asset’s chart shows a gap in the normal price pattern. The enterprising trader can interpret and exploit these gaps for profit.
The reasons for gap creation can be a positive news release by the company, change in the trade analyst’s view, buying or selling pressure among traders, public announcements of the company’s profit, among others.
There are many techniques to take advantage of the gaps in the stock market. Some traders will purchase when technical or fundamental reasons like the company’s financial report support a gap on an opening day.