Gaps are an important part of technical analysis as different gaps have a different story to tell. Gaps usually happen when there is an underlying fundamental or technical factor which has not been absorbed by the stock till that time. There are 4 types of gaps
Area gap, Breakout gap, runaway gap and exhaustion gap. Area gap appears in a non trending zone, breakout and runaway gaps appear in a trending zone and exhaustion gap appears at the end of the trend. Volume info is an important tool to confirm the momentum and trade likewise.