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Gap

A gap is a change in price levels between the close and open of two consecutive days. A gap up open occurs when the opening price is greater than the previous day’s closing price. A gap down occurs when the opening price is lower than the previous day’s closing price. Gap openings can be caused by a catalyst. If there was a positive earnings surprise, many traders might place buy orders for the next day. This could result in the price opening higher than the previous day’s close.

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