It shows the strength of the market ie, moving strength or lacking.
Locate the current phase trend.
GAP can be named on the basis of region it appears.
Area gap
Breakout gap
Runaway gap
Exhaustion gap
Area gap qualify the recent action.
Appears in trending range
Area gap may fill.
During area gap volume is generally low.
Appears at the beginning of new trend.
Appears in non-trending range
Gap should not be filled
Volume should be high.
Appears after breakout.
Gap should not be filled.(trend is strong)
Closing should be at its high.(bearish)
Volume should be high.
It appears after the runaway gap
Gap appears and disappears on the same day.(sellers are coming)
Volume should be high.