Quick Answer
A gap is a range on the chart where no trading occurred: a session whose low is above the prior high (up gap) or whose high is below the prior low (down gap). Gaps tend to be filled later. The three types, told apart by location in the move, are breakaway, runaway, and exhaustion.
The trap in this section is telling the three gap types apart. They look alike, so lock onto the one thing that distinguishes them: where each sits in the move.
What a Gap Is
A gap is a range on the chart where no trading occurred between one session and the next.
- Up gap: a session whose low is above the prior session's high.
- Down gap: a session whose high is below the prior session's low.
- A gap appears as an empty space on the chart and reflects a sudden shift in supply and demand.
- Common heuristic: gaps tend to be filled (price often returns later to trade through the empty range), though not always and not on a fixed timetable.
The Three Gap Types
All three gaps look similar; what separates them is location in the trend, not volume alone.
| Gap type | Where it occurs | What it signals |
|---|---|---|
| Breakaway gap | At the start of a move, as price breaks out of a congestion area or trading range | Begins a new trend; often on strong volume, and less likely to be filled soon |
| Runaway / measuring gap | In the middle of an established trend | Continuation: momentum is accelerating and the trend is likely to persist |
| Exhaustion gap | Near the end of an extended move | Warns of a possible reversal; the move is running out of participants, and these gaps are often filled quickly |
Think of it this way: picture the gap types as mile markers on a single trip. The breakaway is leaving the driveway (the move begins), the runaway is cruising on the open highway (the move accelerates), and the exhaustion gap is the engine sputtering as the tank runs dry (the move is about to end).
Volume Clues on Gaps
Volume helps confirm which gap you are looking at, but location still governs the label.
- A breakaway gap on strong volume increases the odds the breakout is genuine and that the gap will not be filled right away.
- An exhaustion gap typically comes on high, climactic volume: a final burst of buying (in an uptrend) or selling (in a downtrend) as the last participants pile in right before the move runs out of fuel.
Exam Tip: Gotchas
- Location in the trend distinguishes the gaps, not simply high vs low volume. Breakaway = beginning (out of congestion, on strong volume that confirms a genuine new move); runaway/measuring = middle (continuation); exhaustion = end (a climactic, high-volume last gasp that warns of reversal).
- An exhaustion gap comes on HIGH, climactic volume, not fading volume. It is a final surge, so heavy volume late in an extended move points to exhaustion, and that gap tends to fill quickly.