Definition
A gap occurs when a stock's price opens significantly higher or lower than the previous close, leaving an empty space on the chart. Gaps can be caused by earnings, news, or market sentiment changes. Types include breakaway gaps (start new trends), runaway gaps (continue trends), and exhaustion gaps (end trends).
Example
A stock closes at $50 and opens at $55 after strong earnings, creating a $5 gap up that traders may try to fade or follow.
FAQ
What is Gap (Price Gap)?
An area on a chart where no trading occurred between sessions.
Why is Gap (Price Gap) important?
Gap (Price Gap) helps investors evaluate technical analysis and make more informed decisions.