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.

BREAKING DOWN '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 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 >>
  2. How are Runaway Gap patterns interpreted by analysts and traders?

    Find out what runaway gaps mean in a price chart and how traders and technical analysts interpret them differently than other ... Read Answer >>
  3. How are Sanku (Three Gaps) patterns interpreted by analysts and traders?

    Find out how analysts and traders interpret a Sanku, or three gaps, pattern located within a bar chart or Japanese candlestick ... Read Answer >>
  4. How do I implement a forex strategy when spotting a Runaway Gap Pattern?

    Read about some strategies to consider after spotting a runaway gap pattern in the forex market, including how to distinguish ... Read Answer >>
  5. How effective is creating trade entries after spotting a Runaway Gap pattern?

    Understand the basics of the runaway gap and why strategies based on this signal, unlike other types of gaps, have only middling ... Read Answer >>
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