Exhaustion Gap

DEFINITION of 'Exhaustion Gap'

A gap that occurs after the rapid rise in a stock's price begins to tail off. An exhaustion gap usually reflects falling demand for a particular stock.

Exhaustion Gap


The image shows a gap at the end of a large upward movement, signaling a reversal.

BREAKING DOWN 'Exhaustion Gap'

Many technical analysts consider it a temporary gap. The range in prices gapped by the decrease in demand is expected to be filled once demand and the upward pressure on price are re-ignited.

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RELATED FAQS
  1. How are Exhaustion Gap patterns interpreted by analysts and traders?

    Learn how to spot and interpret exhaustion gap patterns like traders and analysts do, and see why these patterns are considered ... Read Answer >>
  2. How do I build a profitable strategy when spotting an Exhaustion Gap?

    Learn potentially very profitable trading strategies traders use to take advantage of a market reversal after identifying ... Read Answer >>
  3. What are the main differences between a Runaway Gap and a Exhaustion Gap?

    Discover the primary differences between runaway and exhaustion gaps, and see why gap differentiation depends on subsequent ... Read Answer >>
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    Read about the primary differences between two types of price chart gaps – breakaway and exhaustion – and how traders react ... Read Answer >>
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    Read about some strategies to consider after spotting a runaway gap pattern in the forex market, including how to distinguish ... Read Answer >>
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