Gap analysis is the quantitative and qualitative comparison of a company or individual’s current performance (i.e., present state) with potential performance (i.e., future or target state).
Gaps are areas on a chart where the price of a stock (or another financial instrument) moves sharply up or down, with little or no trading in between. As a result, the asset’s chart shows a gap in the normal price pattern. The enterprising trader can interpret and exploit these gaps for profit.