Gap: Gaps form when the opening price prints “gapped up/down” to create a blank area on the chart, also referred to as a “window.” This occurs when the high of the day is below the low of the previous day or when the low of the day is above the high of the previous day. Gaps can be considered significant when accompanied by a surge in volume.
Gap (Breakaway): Breakaway gaps are indications of a potential change in trend. A bullish breakaway gap occurs when a stock gaps up after what is considered an extended decline. The same bullish breakaway gaps can also form after an extended base or period of consolidation. A bearish breakaway gap forms when a stock gaps down after what is considered an extended advance. Bearish breakaway gaps can also form after an extended top or period of consolidation.
Gap (Common): Common gaps occur within a trading range or shortly after a sharp move as a reaction. These gaps do not signify the beginning or continuation of a move, but rather represent anomalies. For instance, if a security has declined 20% in a week and gaps up, it would be considered a common gap and not likely to signify a change in trend. Or, if a trading range develops between 20 and 30, and a gap forms in the middle, it is probably a common gap.
Gap – Continuation: A continuation gap forms in the middle of a move and in the same direction as the current move. These gaps signal a continuation of the preceding trend and can mark good entry points. After a short or intermediate advance, a continuation up gap is usually considered bullish and signals a renewal of the uptrend. After a short or intermediate decline, a continuation down gap is usually considered bearish and signals a renewal of the downtrend. This gap is also called a measuring or runaway gap.
Gap – Exhaustion: After an extended or long move, a gap in the direction of the current move is called an exhaustion gap. For an exhaustion gap to be considered valid, prices should reverse soon after the gap and close the gap. After an extended decline, a gap down could signal that the downtrend is about to exhaust itself. An exhaustion gap is confirmed when prices reverse soon afterwards and move above (or “close”) the gap. After an extended advance, an exhaustion gap would be confirmed when prices reverse soon afterwards and move below the gap.
Gap – Measuring: See Gap – Continuation.
Gap – Up/Down: An up gap forms when a security opens above the previous period’s high, remains above the previous high for the entire period and closes above it. Up gaps can form on daily, weekly or monthly charts and are generally considered bullish. A down gap forms when a security opens below the previous period’s low, remains below the previous low for the entire period and closes below it. Down gaps can form on daily, weekly or monthly charts and are generally considered bearish.
Golden Cross: A signal where the shorter moving average moves above the longer moving average. Usually, this term is associated with the 50-day moving average crossing above the 200-day moving average. Also referenced in MACD lines.
Golden Ratio: Also called Phi, the Golden Ratio is 1.618%. The inverse of 1.618% is .618%. These ratios can be found throughout nature, architecture, art and biology. See Fibonacci for more.
Gravestone Doji: A doji line that develops when the Doji is at, or very near, the low of the day. See Doji for more.