A nice example of the so called Continuation Gap. It appears halfway through the move thus it is also known as Measuring Gap. The Continuation gap is shown here as Gap2 and Gap3 (notice that opening of Gap3 is halfway the peak of the run-up). Prices will first peak, reverse and filled the Continuation gaps in time then trend up again (the continuation of the uptrend). Gap 3 was filled last July 16 while Gap2 was filled last Aug 1. That completes the whole cycle of the Continuation Gap thus the stock now is ready to continue its uptrend.Gap1 and Gap4 are gaps that can be identified as an Island Reversal. This name was gotten from the appearance of the cluster of candlesticks that appears to be a separate island.
Two bullish signs you got there and hopefully you have learned two lessons as well for today. P2.50-2.60 might pose some resistance so consider these as your initial reward. Soon as these prices are taken out, look at 130MA which is currently at P2.78 as your next reward. Risk corresponding to support is currently at P2.40. Your assignment: compute for your risk reward ratio. Is the reward worth the risk?
