Gaps

Exhaustion Gaps Exhaustion gaps may occur at the top or bottom of a formation when trends change direction in an atypically quick manner. Gaps of that kind indicate on the direction of next movement of the market and reflect a sudden change in the demand-supply ratio. By a relatively slow reversal of the market you may wait on two exhaustion gaps to left and to right from a consolidation figure when so called exhaustion island is being formed. Real examples of an Exhaustion Gap and Exhaustion Island are shown on Figures 4.51.