When a tradable exits a trading range by trading at price levels that leaves a price area where no trading occurs on a bar chart. Typically, these gaps appear at the completion of important chart formations.
Usually, a high-volume move out of a consolidation pattern. The strength of buying is sufficient to cause the security to jump to higher levels without trading at the intervening prices. A strong, sustained up move is normally indicated.
A price gap which occurs in the beginning of a new trend, many times at the end of a long consolidation period. It may also appear after the completion of major chart formations.
As a consolidation period or reversal formation is completed, price will exit the pattern with an opening price that causes a gap from that pattern. This could be a break through a trend line, a support or resistance line or even through a key point of the pattern such as the neckline of a head and shoulders pattern. Breakaway gaps are often filled during a brief correction after the break.
A price gap that forms on the completion of an important price pattern. A breakaway gap usually signals the beginning of an important price move.
When prices gap away from a technically defined area, such as a congestion area or a trendline.
A gap formed on completion of a price pattern that signals a continued move. For example, the break of a resistance level above a base formation on a gap up.
A gap in prices that signals the end of a price pattern and the beginning of an important market move.
