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.

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.