In this blog, Global Market Astro briefs about the runaway gap or measuring gap. The runaway gap is a type of gap chart pattern used in stock market trend forecasts.
RUNAWAY GAP (OR) MEASURING GAP
A runaway gap is found around the middle of a trend, usually when the price has already started a strong move. It is a strong healthy signal as the trend will continue as it indicates continues, even raising, interest in the stock.
Once the security makes a strong move, the traders waiting on the side-line for better entry or exit may decide it not coming and if they wait further, will be missing the trade. This increased buying or selling creates runaway gap and continuation of the trend. Volume is not much important in runaway gap as in breakaway gap, but should be marked with average volume. If the volume is too extreme, it happens to be an exhaustion gap signalling the end of a trend.
The runaway gap forms support or resistance in similar manner as the breakaway gap. Also, the measuring gap does not frequently fill, and there’s cause for concern if the price breaches through the support or resistance, as it is a sign that the trend is weakening – and could even signal that this is an exhaustion gap and not a runaway gap.
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