A continuation gap takes place during the middle of a trend and confirms that the trend is a strong one and likely to continue. A continuation gap occurs when a trend is picking up momentum and exuberance is running high. The bulls or bears, worried that they may miss the move in this stock or sector, may pile on in force. Volume increases above its average volume on the day of the continuation gap, and new highs or lows within that trend should follow. When a trend is strong, it is not uncommon for a number of
To view this image, please refer to the print version of this book continuation gaps to occur within that trend. Never short into continuation gaps. (See Figure 14-16 for an example of a continuation gaP-)
Was this article helpful?