Exhaustion Gap

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DEFINITION of 'Exhaustion Gap'

A gap that occurs after the rapid rise in a stock's price begins to tail off. An exhaustion gap usually reflects falling demand for a particular stock.

Exhaustion Gap


The image shows a gap at the end of a large upward movement, signaling a reversal.

BREAKING DOWN 'Exhaustion Gap'

Many technical analysts consider it a temporary gap. The range in prices gapped by the decrease in demand is expected to be filled once demand and the upward pressure on price are re-ignited.

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RELATED FAQS
  1. How do I build a profitable strategy when spotting an Exhaustion Gap?

    An exhaustion gap offers a trader the opportunity to enter a sell position near the very top of a long uptrend and to quickly ... Read Full Answer >>
  2. How effective is creating trade entries after spotting an Exhaustion Gap pattern?

    Trading after an exhaustion gap can be a very lucrative strategy, though the volatile nature of this type of pattern means ... Read Full Answer >>
  3. What assumptions are made when conducting a t-test?

    The common assumptions made when doing a t-test include those regarding the scale of measurement, random sampling, normality ... Read Full Answer >>
  4. How are double exponential moving averages applied in technical analysis?

    Double exponential moving averages (DEMAS) are commonly used in technical analysis like any other moving average indicator ... Read Full Answer >>
  5. How do you know where on the oscillator you should make a purchase or sale?

    Common oscillator readings to consider making a buy or sale are below 20 or above 80, respectively. More aggressive investors ... Read Full Answer >>
  6. What are the alert zones in a Fibonacci retracement?

    The most commonly used Fibonacci retracement alert levels are at 38.2% and 61.8%. A 50% retracement level is also commonly ... Read Full Answer >>

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