DaytradeTeam Profitzzz

The last two posts have told you about the breakaway gap, which typically starts a stock's run and the measuring gap, which typically occurs about halfway through the stock's run higher.

Today's topic is the exhaustion gap--the final gap in the run of a stock. After a big run, the stock will usually give you one more big overnight move before breaking the trend and heading in the opposite direction.

You can see the sequence of gaps on TASR as it has run downwards over the last year. The first highlighted area is the breakaway gap, the second takes place about halfway down the chart and is the measuring gap, and the third highlighted area is probably the exhaustion gap.

When a stock moves back through the exhaustion gap, it is a confirmation signal that the run is over. If TASR can get a move back up through its downtrend line here, it could spell a nice buying opportunity for quick stock trading profits. All thanks to the "the run is over" sign that an exhaustion gap puts up for us!

DaytradeTeam will often use the three types of gaps during analysis in its options trading and day trading systems. Be sure to check out a trial membership of DaytradeTeam right now and see what you've been missing :)