A break between prices on a chart that occurs when the price of a stock makes a sharp move up or down with no trading occurring in between. Gaps can be created by factors such as regular buying or selling pressure, earnings announcements, a change in an analyst's outlook or any other type of news release.



An example of two different gaps can be seen in the chart above. Notice how the stock closes the trading session before the first gap at $50 and opens the next trading day near $46 with no trading occurring between the two prices. Gaps are a regular occurrence in all financial markets. However, they are rarely seen in the forex market since it is highly liquid and trades 24 hours a day.

  1. Upside Gap Two Crows

    A bearish market reversal signal in technical analysis. The upside ...
  2. Exhaustion Gap

    A gap that occurs after the rapid rise in a stock's price begins ...
  3. Breakaway Gap

    A term used in technical analysis. A breakaway gap represents ...
  4. Forex - FX

    The market in which currencies are traded. The forex market is ...
  5. Runaway Gap

    A type of gap on a price chart that occurs during strong bull ...
  6. Island Reversal

    An occurrence in technical analysis where a stock price will ...
Related Articles
  1. Options & Futures

    Reducing Risk With Options

    If you want to use leverage to your advantage, you must know how many contracts to buy.
  2. Forex Education

    Playing The Gap

    Learn how you can earn money by analyzing the disruptions in normal price patterns.
  3. Active Trading Fundamentals

    Gauging Support And Resistance With Price By Volume

    This straightforward histogram can help you analyze the buying and selling interest in a stock.
  4. Charts & Patterns

    Advanced Candlestick Patterns

    Go beyond the basics! Learn to identify and trade island reversals, kicker patterns and more.
  5. Active Trading

    The Ups And Downs Of Biotechnology

    This volatile sector can provide huges gains, but there's also lots of downside.
  6. Chart Advisor

    ChartAdvisor for November 27 2015

    Weekly technical summary of the major U.S. indexes.
  7. Chart Advisor

    Pay Attention To These Stock Patterns Playing Out

    The stocks are all moving different types of patterns. A breakout could signal a major price move in the trending direction, or it could reverse the trend.
  8. Chart Advisor

    Now Could Be The Time To Buy IPOs

    There has been lots of hype around the IPO market lately. We'll take a look at whether now is the time to buy.
  9. Chart Advisor

    Copper Continues Its Descent

    Copper prices have been under pressure lately and based on these charts it doesn't seem that it will reverse any time soon.
  10. Technical Indicators

    Using Pivot Points For Predictions

    Learn one of the most common methods of finding support and resistance levels.
  1. How effective is creating trade entries after spotting a Upside Tasuki Gap pattern?

    The upside tasuki gap pattern is a useful tool for creating an effective trade strategy because the mechanics and interpretation ... Read Full Answer >>
  2. How are Runaway Gap patterns interpreted by analysts and traders?

    Gaps appear in price charts whenever price movement occurs in between trading periods. This usually results from important ... Read Full Answer >>
  3. How do I build a profitable strategy when spotting a Shooting Star pattern?

    The shooting star pattern is interpreted by analysts as a severely bearish market reversal signal. A potentially very profitable ... Read Full Answer >>
  4. How are Stick Sandwich patterns interpreted by analysts and traders?

    Comprised of three candles, the stick sandwich candlestick pattern is so named because the middle candle is always the opposite ... Read Full Answer >>
  5. How do I build a profitable strategy when spotting a Runaway Gap pattern?

    While other types of gaps lend themselves quite easily to the creation of profitable trade strategies, the runaway gap requires ... Read Full Answer >>
  6. How are Shooting Star patterns interpret by analysts and traders?

    The shooting star candlestick formation is commonly interpreted by traders and market analysts as a bearish signal of market ... Read Full Answer >>
  7. Why do breakaway gaps happen on securities?

    In trading terms, a gap represents a very important pricing phenomenon. Gaps manifest themselves as empty spaces on bar or ... Read Full Answer >>
  8. Why is the Bullish abandoned baby pattern important for traders?

    In candlestick charting terminology, abandoned baby patterns are small doji candles that form at the top or bottom of a price ... Read Full Answer >>
  9. Why is the Bullish Belt Hold useful for traders?

    The bullish belt hold, also known as the white opening shaven bottom, is a candlestick chart trading pattern that may be ... Read Full Answer >>
  10. What are common trading strategies when identifying a Downside Tusuki Gap pattern?

    Tasuki gap patterns are three-day candlestick trend patterns. They are typically interpreted as a continuation formation ... Read Full Answer >>
  11. Does a stock split lead to the gapping up/down of the stock?

    If a company splits its stock, there will be no gapping of the stock due to the split itself. A stock split does not materially ... Read Full Answer >>
  12. Do stop or limit orders protect you against gaps in a stock's price?

    Many individuals are hesitant to invest in the stock market because of the large gaps in prices talked about in the news. ... Read Full Answer >>

You May Also Like

Hot Definitions
  1. Take A Bath

    A slang term referring to the situation of an investor who has experienced a large loss from an investment or speculative ...
  2. Black Friday

    1. A day of stock market catastrophe. Originally, September 24, 1869, was deemed Black Friday. The crash was sparked by gold ...
  3. Turkey

    Slang for an investment that yields disappointing results or turns out worse than expected. Failed business deals, securities ...
  4. Barefoot Pilgrim

    A slang term for an unsophisticated investor who loses all of his or her wealth by trading equities in the stock market. ...
  5. Quick Ratio

    The quick ratio is an indicator of a company’s short-term liquidity. The quick ratio measures a company’s ability to meet ...
  6. Black Tuesday

    October 29, 1929, when the DJIA fell 12% - one of the largest one-day drops in stock market history. More than 16 million ...
Trading Center