Direct Answer
A gap occurs when price opens beyond the prior bar's high or low, leaving a visible space on the chart with no trading in between. Where the gap happens in a trend tells you what it means: a breakaway gap starts a new trend as price exits a base on high volume and is often not quickly filled; a runaway (measuring) gap appears mid-trend and reflects strong ongoing momentum; an exhaustion gap appears near the end of an extended run and frequently fills quickly as the move loses steam and reverses.
Key Takeaways
- A gap forms when price opens beyond the prior bar's high or low, leaving no trades in between.
- Breakaway gaps mark the start of a new trend, usually breaking out of a base on high volume.
- Runaway gaps appear mid-trend and reflect strong, continuing momentum.
- Exhaustion gaps show up late in an extended move and often fill quickly as the trend loses steam.
- Whether a gap fills quickly or stays open is itself a clue about which type of gap it is.
What Is a Gap?
A gap is a break in a chart's price sequence: the next bar's open trades beyond the prior bar's high or low, so no shares or contracts change hands at any price in between. On a daily chart this most often happens overnight, when news, an earnings report, or a shift in sentiment moves the security before the next session opens. Because no orders filled in that price zone, the gap leaves a visible empty space between two bars.
Not every gap carries the same meaning. The same visual event -- an open beyond the prior range -- can signal the start of a trend, the middle of one, or its end, depending on where it appears relative to the broader price structure. Traders classify gaps into three main types for exactly this reason: breakaway, runaway, and exhaustion.
Breakaway Gaps: The Start of a New Trend
A breakaway gap occurs at the start of a new trend, typically as price exits a consolidation or base on high volume. After a period of sideways trading, a catalyst pushes price to open well beyond the recent range, and heavy participation confirms that a genuine shift in supply and demand is underway rather than a one-bar overreaction. Because the move reflects a real change in how the market is pricing the security, breakaway gaps are often not quickly filled -- the old trading range becomes support (in an uptrend) or resistance (in a downtrend) rather than a magnet price snaps back to.
Runaway Gaps: Confirmation Mid-Trend
A runaway gap, also called a measuring or continuation gap, occurs in the middle of an established trend rather than at its start. It reflects strong ongoing momentum -- so many participants want in (or out) at once that price opens beyond the prior bar's range even though the trend is already well underway. Runaway gaps are sometimes used to roughly estimate how much further a move may run, by measuring the distance already covered from the trend's origin to the gap and projecting a similar distance forward, though this is a rough heuristic rather than a precise target.
Exhaustion Gaps: A Warning Near the End
An exhaustion gap occurs near the end of an extended trend, often after a sharp run-up. It looks like a continuation gap at first, but instead of confirming fresh momentum it marks the last burst of buying or selling before the move runs out of participants willing to chase price further. Exhaustion gaps frequently get filled quickly as the move loses steam and reverses -- a fast retrace back through the gap, rather than the gap holding as new support or resistance, is the tell that separates it from a breakaway or runaway gap.
Comparing the Three Gap Types
| Gap type | Trend stage | Volume | Typical fill behavior |
|---|---|---|---|
| Breakaway | Start of a new trend | Typically high | Often not quickly filled |
| Runaway (measuring) | Middle of an established trend | Elevated, in line with the trend | Usually holds while the trend continues |
| Exhaustion | Near the end of an extended trend | Often a final spike | Frequently filled quickly |
Trading Around Gap Patterns
Because the three gap types imply different things, the trading approach differs by type. With a suspected breakaway gap, traders generally wait for the session to close in the direction of the gap on strong volume before treating the prior range as a new support or resistance zone -- entering only after that confirmation, with a stop back inside the old base to protect against a false start. With a runaway gap appearing mid-trend, the gap itself is often treated as a signal that the existing trend remains healthy, reinforcing an existing position rather than triggering a new entry on its own.
A suspected exhaustion gap calls for more caution than excitement. Because these gaps frequently fill quickly, aggressive traders may look for confirmation of reversal -- such as a close back through the gap -- before acting, while trend-following traders already in the move may use the gap as a signal to tighten stops or take partial profits rather than add to the position. In every case, position size should reflect that a gap can move price sharply against a trade before it's possible to react.
Gap Pattern Checklist
- Confirm the open actually traded beyond the prior bar's high or low -- not just a wide-range bar.
- Check where the gap sits in the broader trend: start (breakaway), middle (runaway), or late/extended (exhaustion).
- Look at volume -- breakaway and exhaustion gaps typically show a volume spike; ordinary noise gaps often don't.
- Watch whether the gap fills quickly (exhaustion warning sign) or holds (consistent with breakaway or runaway).
- Note the prior range's high/low as a reference level -- it often becomes support or resistance after a breakaway gap.
- Size positions with the awareness that gaps move price without giving a chance to react mid-gap.
The Gap Type Is Only Knowable After the Fact
Breakaway, runaway and exhaustion gaps are distinguished by what follows them, not by how they look on the day. All three appear as a void between one session's range and the next, and the label is applied afterwards from the subsequent price action. Trading a gap on its assigned type at the moment it forms means acting on a classification that has not yet been determined.
What is available in real time is context. Where the gap sits relative to a trading range, how far the trend has already extended, and what volume accompanied it are observable immediately and narrow the possibilities. A gap out of a long consolidation and a gap after an extended vertical advance are different situations even before the label exists.
The persistent misconception is that gaps must fill. Many do and many have remained open for years, and the ones that do not tend to be the ones that mattered most, since a gap driven by a genuine change in circumstances has no reason to close.
None of this classification addresses cause. The chart shows the void identically whether it came from an earnings release, an index rebalance or an illiquid open, and cause is the variable that most determines what follows.
Gap Patterns FAQs
What is the difference between a breakaway gap and a runaway gap?
A breakaway gap occurs at the start of a new trend, typically as price exits a consolidation or base on high volume, and it's often not quickly filled. A runaway gap occurs in the middle of an established trend, reflecting strong ongoing momentum rather than a new trend beginning.
What is an exhaustion gap?
An exhaustion gap occurs near the end of an extended trend, often after a sharp run-up, and it frequently gets filled quickly as the move loses steam and reverses.
Does every gap get filled?
No. Breakaway and runaway gaps are often not quickly filled because they reflect genuine shifts in supply and demand, while exhaustion gaps frequently get filled quickly because they mark the last burst of a move running out of buyers or sellers.
How can a trader tell which type of gap they're looking at?
Context matters more than the gap itself: a gap appearing as price breaks out of a base or consolidation on high volume is more likely breakaway, a gap appearing mid-trend with steady momentum is more likely runaway, and a gap appearing after an extended, accelerating run is more likely exhaustion.
What happens if a gap fills quickly?
A quick fill, especially after an extended trend, is a warning sign consistent with an exhaustion gap -- it suggests the move has lost momentum and a reversal may be underway.
What is a common gap, and why is it usually ignored?
A common gap opens inside an existing trading range without a clear catalyst, and it typically closes quickly. Because it does not mark a change in supply or demand, it carries little of the information the other gap types are read for. Its main practical relevance is negative: mistaking a common gap for a breakaway gap produces an entry into a range rather than into a trend.
How does an overnight news gap differ from a gap that forms during a session?
An overnight gap reflects information priced during hours when the market was closed, and the opening auction is where that repricing is resolved into a single figure. A gap forming during continuous trading, which happens more often in thin instruments, reflects an absence of orders between two prices rather than an information event. The first tends to hold better because it represents an actual change in what participants believe.
Does a gap create support or resistance at its edges?
Many traders treat the two edges of a gap as reference levels on the reasoning that no trading occurred inside, so there is no accumulated positioning to defend within it. Whether those edges hold is inconsistent, and the practice is better described as a convention than a demonstrated property. What the edges do reliably provide is a defined level for a stop, which is useful regardless of why the level might hold.
How should position size be adjusted when a strategy holds through scheduled gap risk?
A stop cannot execute inside a gap, so the loss on an adverse open can far exceed the planned amount. Sizing against a plausible gap distance rather than against the stop distance produces a much smaller position, which is the appropriate response rather than an overcautious one. Strategies that repeatedly hold through earnings or scheduled announcements need this adjustment built into the rules rather than applied case by case.