Glossary
Price gap
A space on a chart where a bar opens above the prior high or below the prior low, leaving a range where no trading occurred.
On this page
A price gap is an empty space on a chart between one bar and the next: the new bar's entire range sits above the previous bar's high (a gap up) or below its low (a gap down). On daily charts, gaps usually form overnight, when news such as earnings, guidance or an economic release arrives while the regular session is closed. Gaps matter because they mark moments when the market repriced a stock abruptly, and because the gap zone itself often acts as support or resistance later.
How it works
Some traders also count partial gaps, where the open is beyond the prior close but within the prior range. Extended-hours trading can blur gaps, since some prices printed in the premarket session even if the regular-session chart shows an empty zone.
Types of gaps
- Common gap: small, inside a trading range, often filled quickly.
- Breakaway gap: price leaps out of a consolidation or breakout level, often on heavy volume, starting a new trend.
- Runaway (continuation) gap: occurs mid-trend, signaling strong participation.
- Exhaustion gap: a final burst near the end of a long move, followed by a reversal.
These labels are clearest in hindsight. The saying that "gaps always fill" is not reliable: many breakaway gaps never close. Gaps also create risk for stop orders, which can execute far beyond the stop price when the market opens through them.