Gap analysis indicates the strength of the market and the directional movement. This helps the investors to locate the phase of trend like whether the gap is running away or break out.Appears due to the difference in the trading range between the previous day closing and the following day opening ( May be due to the good positive news about the stock after trading close. 4 gaps – Area /breakout/run away/Exhaustion gap.
Area gap not much significant. Break out is exciting and we can make money out of this..Run away gap caused by increased interest in the market. Seller may turn out to be buyer to cover up short position created. Exhaust happens at the end of a trend. general difficult to spot as it will not be so visible. Peoples with candlestick only will be able to spot this.