TrendSpider makes it easy to identify gaps that occur when new information is priced into the market. While technical analysis reigns supreme when there’s no news, significant news events can have a dramatic impact on prices as the market determines a new valuation.
For example, an unexpected earnings report or buyout rumor could be enough change a stock’s long-term trend. Short trades could be stopped out and long trades may experience some profit-taking as shares trade hands. This means that any preexisting technical analysis may no longer be valid.
TrendSpider recognizes these gaps and avoids drawing trend lines across price gaps, while islands are displayed alongside the bottom of the chart as colored bars.
It’s easy to toggle the platform’s recognition of gaps:
Click on the … next to the Trends button in the top toolbar.
Select Respect gaps for TrendSpider to treat gaps as the end of a trend.
Select Ignore gaps for TrendSpider to ignore gaps and look at the bigger trend.
Click Apply to save the changes.