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Theodore, Saskatchewan | So if charts are a map of price determined by buyers and sellers we know that - a gap is a place where buyers or sellers outnumber the other to the point that no trade takes place. Often the discussion is WHY but more importantly we should focus on WHAT. The what is that new information caused buyers or sellers to step back and position on only one side of the market. Similar action takes place at a HIGH or LOW commonly known as a pivot. So a gap in the price is really the same as a "pivot".
What happens when a market reaches an old high or low? Well it can encounter the same buyers or sellers that helped create it and therefore price experiences support or resistance. Now in the last couple months discussion on NAT have looked at how "whales" play games in the support and resistance lines to confuse trend traders and fill "their" position. Be careful of move just past the lines.
Sure a gap will be filled, and highs and lows will be passed on a chart. But the focus does not need to be on the fact that it exists but what price will do when it reaches that point. Like saying beans all time high is 1794 and it will be "filled". So yes it could return to the all time high but it might be this spring or it might be in 2020, like you said whoopty doo. More importantly for us is to realize that when it reaches that point there will be significant sellers. Price told us there is sellers there by making a top.
I had not drawn the lines on a soybean chart so I just did for this post..
The top blue lines are from a gap in July 2008. Do you see price movement in these lines?
Below it is lines from gaps this summer (on a daily nearest chart). Is there price movement around those lines?
Sure enough it looks like we have support and resistance. And there is the beginning of gaps. From here there is a lot of things you can do with that info (using gaps as pivots), but it gives you an idea for approaching gaps.
 (1-ProphetX - WIP - [SOYBEANS January 2013] 01012013 51603 PM.jpg)
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 1-ProphetX - WIP - [SOYBEANS January 2013] 01012013 51603 PM.jpg (31KB - 38 downloads)
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Technical guys tell me about gaps in charts.
