GAP is the difference in the trading range, which can be seen using candlesticks charts.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 area GAP, breakout GAP, runaway GAP and exhaustion GAP.
Area GAP: The GAP appears between demand and supply zone with low volume.
Breakout GAP: The GAP appears during a breakout with high volume.
Runaway GAP: The GAP appears after the breakout and while moving in the trend with significant volume.
Exhaustion GAP: The GAP is created at the start of the day(starting price is much higher than the previous day’s highest price) in the trending area but gets closed by end of the day with Red body(in case of Bearish) with high volume.