Runaway Gap

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DEFINITION of 'Runaway Gap'

A type of gap on a price chart that occurs during strong bull or bear movements characterized by an abrupt change in price and appearing over a range of prices. They are best decribed as gaps caused by an sudden increase/decrease in interest for a stock.

Runaway Gap



The image shows a gap in the middle of a large upward movement.

INVESTOPEDIA EXPLAINS 'Runaway Gap'

Sudden price changes are expected during strong bull and bear markets. However, most analysts view these gaps as temporary, expecting prices to converge upon the range in which the gap occurred in order to fill the missing segments.

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RELATED FAQS
  1. What are the reasons Runaway patterns are formed?

    Runaway patterns, also known as runaway gap patterns or measuring gaps, represent leaps in a stock's price that is already ... Read Full Answer >>
  2. 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 >>
  3. 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 >>
  4. How is a simple moving average calculated?

    The simple moving average (SMA) is a widely used technical used by traders and investors. It can be calculated for different ... Read Full Answer >>
  5. Why does the efficient market hypothesis state that technical analysis is bunk?

    The efficient market hypothesis (EMH) suggests that markets are informationally efficient. This means that historical prices ... Read Full Answer >>
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