DEFINITION OF GAP

-A gap is an area discontinuity in a security's chart where its price either rises or
falls from the previous day’s close with no trading occurring in between. Gaps are
common when news causes market fundamentals to change during hours when
markets are typically closed, for instance an earnings call after-hours.

TYPES OF COMMON GAPS BREAKAWAY GAPS RUNAWAY GAPS EXHAUSTION GAPS

GAPS
DEFINITION Common gaps also These gaps occur when Runaway gaps is a technical signal marked by a
know as area gaps. the price gaps above a typically seen on break lower in prices (usually on
In generally support or resistance charts, occur when a daily chart) that occurs after a
common gaps gets area, like those trading activity skips rapid rise in a stock's price over
filled relatively established during a sequential price several weeks prior. This signal
quickly usually trading range. When points, usually driven reflects a significant shift from
within a couple of the price breaks out a by intense investor buying to selling activity that
day when well-established trading interest. In another usually coincides with falling
compared to other range via a gap. words, there was no demand for a stock. The
gaps. Breakaway gaps could trading, defined as an implication of the signal is that
also exist out of exchange of an upward trend may be about
another type of chart ownership in a to end soon.
pattern, such as security, between the
triangle, wedge, cup price point where the
and handle, rounded gap and where the
bottom or top, or head gap ended.
and shoulders pattern.

EXAMPLE OF GAPS