Exhaustion Gap

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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.

INVESTOPEDIA EXPLAINS '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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    An exhaustion gap offers a trader the opportunity to enter a sell position near the very top of a long uptrend and to quickly ... Read Full Answer >>
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    Trading after an exhaustion gap can be a very lucrative strategy, though the volatile nature of this type of pattern means ... Read Full Answer >>
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    Trading opportunities on the long side can be spotted by looking at stocks with the worst year-to-date (YTD) performance, ... Read Full Answer >>
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