Some investors watch for “gaps” on daily stock-price charts as meaningful signs of future price moves. What exactly are they?
Stock charts show vertical bars with opening, high, low and closing prices. Most of the time, the price ranges overlap from one day to the next, but sometimes—say, a stock opens higher than the previous day’s trading range and stays there—there will be a gap, or empty space on the chart where no trading occurred. Technical analysts see some gaps as harbingers of a change in trends. Here are two key types: