A Study Involving Short-Term Gaps
60 Minute Time Frame; enlarge the chart to fully see the image
- Sequence of events dates back to last Wednesday
- Purpose is to demonstrate how a gapping price point can fill and when this fill does occur
- Yellow gaps are gap-downs, and green gaps are gap ups
- The imbalances in supply and demand have their tendency of settling when price either enters the gap or fully closes it
- The hourly candlestick can open or close near the gaps opening and closing points
Trading with or against the direction of a gap fill
In three cases of a bullish gap they have all filled eventually. The price action on Monday really created a massive imbalance that is starting to work its way through today.
What we have done is we have placed notes on each sides of the gap showing when they open and when they close and in almost every case the "closed" notations in italic highlight the price territory when the gap finally partially or fully closed.
We believe that 33 plus or minus 25 cents is a reasonable area to start buying VXX again either though shares or call options with strikes above 33: such as 35, 37 or even 39's
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