Chartered Market Technician (CMT) Practice Exam

Question: 1 / 400

When do gaps typically appear in the trading market?

During market volatility

Between the close of the market on one day and the open of the next day

Gaps in the trading market typically appear between the close of the market on one day and the open of the next day. This phenomenon occurs when there is a significant change in the price of a security that happens after the market closes. Factors that can cause such price movements include news announcements, economic data releases, earnings reports, or major geopolitical events that occur while the market is closed. As a result, when trading resumes, the price of the security opens at a level that is different from its previous close, creating a "gap" on the price chart. This gap can reflect either a gap up or a gap down, depending on whether the open is above or below the previous day's closing price.

While gaps can be influenced by market volatility or high trading volume, they are fundamentally defined by the timing of the market's closure and opening.

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At the opening of an earnings report

During high trading volume periods only

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