In cryptocurrency, the term "Gap" refers to a situation where the price of an asset changes significantly between the end of one trading period and the beginning of the next, skipping intermediate price levels. A Gap occurs when there are no trades at a particular price between trading sessions or when there is a significant price movement, usually caused by news or other significant market events.Gaps can be of two types:
- Upward Gap: In this case, the price opens above the closing level of the previous trading period, that is, the price bounces upwards, leaving an empty space (gap) between the previous and the current price levels.
- Downward Gap: In this case, the price opens below the closing level of the previous trading period, that is, the price jumps down, creating an empty space (gap) between the previous and current price levels.
However, it should be noted that trading based on gaps has its own risks, as volatility can be high, and it is not always guaranteed that the gap will be closed soon. Therefore, traders should carefully study the market and use additional indicators and strategies to confirm their trading decisions.
Cryptocurrency gaps can be important for traders because they can indicate a strong price movement and signal important changes in market dynamics. Gars can be used to make decisions about entering or exiting a position, as well as to determine support and resistance levels.