Mechanics and Dynamics of Charting
We shall be covering gaps in more detail in Chapter 5, where we will be ana-
lyzing gaps in relation to market phase. The four main types of gap covered are:
- Common gaps
- Breakaway gaps
- Runaway/Continuation/Midway gaps
- Exhaustion Gaps
3.3 Constant Chart Measures
There are five types of constant measure charts, namely:
- Constant Time Charts—bar closes when a specified time interval is met, for
example, Candlestick Charts, Bar Charts, Equivolume Charts - Constant Range Charts—bar closes when a specified excursion in price is met,
for example, Point‐and‐Figure Charts and Renko Charts - Constant Volume Charts—bar closes when a specified volume is met
- Constant Transaction (Tick) Charts—bar closes when a specified number of
transactions (trades) is met - Constant Volatility Charts—bar closes when a specified amount of standard
deviation or ATR is met
Constant‐time Charts
Constant‐time charts quantize price activity into units of time, or intervals. Each
bar is complete once a specified amount of time has elapsed. Hence, such charts
are also referred to as interval charts. Below are the characteristics associated with
constant time charts:
■ (^) The bar range is variable
■ (^) The bar duration is constant
figure 3.9 Four Types of Gapping Action Representing Areas of Non‐Trading Activity.