This is the fourth of nine NebGuides laying the foundation for producers who want to study the technical side of market analysis. Anyone studying technicals or markets is continually looking for trends, ways to measure market movement, and support and resistance areas. This occurs in highly volatile markets, not in slow moving sideways trends.
Gaps occur when the market is about to make or end a major move.
The breakaway gap occurs near the bottom or top of a market, just as the market begins a major move. The grain producer generally looks for this gap when the market is leaving a low sideways trending market. This helps determine whether to continue to hold grain or wait to price grain later. The breakaway gap signals a major bull, or upward move, verified by the market itself. The producer now needs an indicator to estimate how high this bull market might go.