Definition
Gaps occur when a stock opens significantly higher or lower than the previous close with no trades in between. Types include common gaps (usually filled), breakaway gaps (start of trends), runaway gaps (mid-trend), and exhaustion gaps (end of trends).
Example
A stock closes at $50 and opens at $55 on earnings news. This $5 gap up might be a breakaway gap if earnings were transformative, or could fill if the news disappoints.
FAQ
What is Gap (Price Gap)?
A price discontinuity where no trading occurs between two sessions.
Why is Gap (Price Gap) important?
Gap (Price Gap) helps investors evaluate chart patterns and make more informed decisions.