Gap Analysis: A Study

In a technical analysis chart, a gap represents an area where no trading takes place. It is is essentially an empty space between one trading period and the previous trading period. The GAP is formed when there is a large-enough difference in the opening price of a trading period where that price and the subsequent price moves do not fall within the range of the previous trading period. There are four types of gap: Area gap, Breakout gap, runaway gap and exhaustion gap.