GAP on a bear candel

Discussion in 'Newbie Questions' started by lucacrebbe, Apr 22, 2019.

  1. lucacrebbe

    lucacrebbe Trader

    71
    0
    22
    Hi, can you help me understand this?

    Where I marked with the black arrow we have a gap after a doji that seemed bullish with a strong bullish pression (you can see the long shadow). At the same time, however, the volume for that day was very low compared to that of the previous day's volume. The next day begins with a gap and an increase in volume.

    I have two questions:
    1) In a situation like this in case you found yourself on the doji candle, what would you have done? would you have seen the volume decrease and you wouldn't have entered bullish?

    2) The next day, given the gap and the increase in volume, what would you have done? Would you have entered bullish or seeing the gap would you have entered bearish?

    Charttrading.png
     
  2. Enivid

    Enivid Administrator Staff Member

    11,509
    420
    114
    1) I would disregard the doji at all based on the unnaturally low volume.

    2) I would not base my trades on a gap alone.
     
  3. lucacrebbe

    lucacrebbe Trader

    71
    0
    22
    Thank you
    The Gap there what does it tell us? Does it tell us that the next day the sellers were prone to sell at a lower price,
    in order to get rid of their stocks then meeting buyers, who would never have bought at a higher price than they then bought?
     
  4. Enivid

    Enivid Administrator Staff Member

    11,509
    420
    114
    I don't know for sure, but I would guess that the gap means that something (some news) became known during the closing hours, which made traders revise their pricing of this asset. Perhaps, it was even something unrelated to this particular asset. It could be something related to the market as a whole.
     

Share This Page