Gap analysis helps one to find out the strength of the markets.

Gaps are certain patterns which are discernible from bar charts and candle stick patterns . In Gaps, there is a discontinuity or space in price from the close of the previous day and the next day. Similarly, in a declining market also gaps can be formed when the closing price of one day is lower than the low of the previous day. There are four types of Gaps depending on their particular characteristics. They are : Area Gap, Break out Gap, Run Away Gap and Exhaustion Gap. They are particularly useful to find out the strength and direction of the markets and do not provide any clear buy sell signals on their own.