A gap is the jump between one session’s close and the next session’s open. Its size is easy to measure; its type depends on where it appears and on what happens in the sessions after it.
Gap up and gap down
A price gap is a jump between one session’s close and the next session’s open. A gap up opens above the previous close and a gap down opens below it, usually after news or orders that arrived while the market was closed, such as an earnings release. On a candlestick chart the gap shows as empty space between two bars.
Two definitions are in common use. An opening gap compares the open with the previous close, which is what most scans measure. A full gap is stricter: for a gap up, the whole session trades above the previous session’s high, leaving a window on the chart with no trading in it. Every full gap starts as an opening gap, but many opening gaps trade back into the previous session’s range during the same session.
| Measure | Gap up | Gap down |
|---|---|---|
| Open compared with the previous close | Above | Below |
Sign of gapPct | Positive | Negative |
| Full gap when | The session low stays above the previous high | The session high stays below the previous low |
| Filled when | A later low reaches the previous close | A later high reaches the previous close |
Measure a gap with gapPct
CleverScan measures the opening gap as a percent of the previous close in the field gapPct. A stock that closed at $40.00 and opened at $41.20 has a gapPct of 3.00; an open of $38.80 gives −3.00. The previous close of a traded stock is always above zero, so the ratio is always defined.
gapPct = (open ÷ previous close − 1) × 100open- the opening price of the session
previous close- the closing price of the session before
securityType = "Stock" and gapPct >= 3 and volumeRatio >= 1.5Gap ups of at least 3% on at least 1.5 times average volume.
securityType = "Stock" and gapPct <= -3 and volumeRatio >= 1.5The mirror rule for gap downs of at least 3%.
A fixed percent means different things for different stocks. A 3% gap is unusual for a stock whose average true range is 1% of its price and routine for one whose range is 6%. Comparing the gap with atrPct14 scales it to the stock’s own movement.
securityType = "Stock" and gapPct >= 1.5 * atrPct14 and volumeRatio >= 1.5Gap ups larger than one and a half times the stock’s average true range, both measured as a percent of price, on at least 1.5 times average volume.
Common, breakaway, runaway and exhaustion gaps
Chart analysts classify gaps by where they appear in the price structure. The size of a gap does not identify its type; its location, the volume behind it and the sessions that follow do. The hypothetical chart shows one gap of each type.
| Type | Where it appears | Typical volume | What tends to follow |
|---|---|---|---|
| Common | Inside a range or in quiet trading | Ordinary | Often filled within a few sessions |
| Breakaway | At the edge of a range, or past a level that had held | Heavy | A new move away from the range; a quick fill weakens the reading |
| Runaway (continuation) | Partway through an established trend | Above average | The trend continues; the gap can stay open for a long time |
| Exhaustion | Late in an extended move | Often the heaviest of the move | A stall, then a reversal that fills the gap |
| Gap | Session | Previous close ($) | Open ($) | gapPct (%) | Volume ratio | Filled by the end of the figure |
|---|---|---|---|---|---|---|
| Common | 21 | 31.00 | 31.50 | 1.61 | 0.89 | Yes, session 22 |
| Breakaway | 30 | 31.80 | 33.20 | 4.40 | 2.57 | No |
| Runaway | 39 | 35.90 | 36.95 | 2.92 | 1.62 | No |
| Exhaustion | 50 | 41.10 | 42.60 | 3.65 | 2.67 | Yes, session 52 |
Breakaway gap vs exhaustion gap
On the day it appears, an exhaustion gap can look exactly like a breakaway gap: both are large and both come with heavy volume. In the figure their volume ratios are nearly the same, 2.57 and 2.67. What separates them is the context before the gap and the behavior after it: a breakaway gap leaves a range or a level that had held, while an exhaustion gap arrives after a long advance, when the stock is already far above its averages.
- Before the gap: a breakaway gap starts from a base; an exhaustion gap starts from an extended run, such as a close far above the 50-session average.
- On the gap session: an exhaustion gap often closes below its open, as in session 50, while the breakaway session in the figure closes near its high.
- After the gap: a breakaway gap holds above the previous close; an exhaustion gap is filled within a few sessions, and that fill is the evidence that defines it.
Because the classification depends on later sessions, an exhaustion gap is identified in hindsight. A rule that labels a gap as exhaustion on the day it appears uses information it could not have had, the same look-ahead problem that affects strategy tests.
securityType = "Stock" and gapPct >= 3 and distSma50Pct >= 20Gap ups of at least 3% in stocks already 20% or more above their 50-session average: gaps late in a run, to review for signs of exhaustion. The rule does not identify exhaustion by itself.
Counter-example: a large gap on heavy volume at the end of a long, tight base is not an exhaustion gap just because it is large. The context before the gap points to a breakaway, whatever its size.
Continuation gaps in an established trend
A continuation gap, also called a runaway or measuring gap, appears in the middle of a trend that is already under way, with no range just before it. It suggests that participants were still willing to trade at less favorable prices overnight, in the direction of the trend. In the figure the runaway gap in session 39 opens 2.92% above the previous close on 1.62 times average volume, below the breakaway volume.
- The stock is already trending, with higher highs, higher lows and a close above a rising 50-session average.
- There is no base just before the gap; it interrupts a run of advancing sessions.
- Volume is above average, though often below the volume of the breakaway gap.
- Later sessions hold above the previous close; a quick fill turns the reading toward a possible exhaustion gap.
Older chart literature calls it a measuring gap because it was said to appear near the middle of a move. In the figure the gap spans 36% to 46% of the advance from the breakaway gap’s previous close of 31.80 to the high of 43.10. Treat the halfway idea as a hypothesis to check on your own charts, not as a price projection.
What a gap fill means
A gap is filled when price trades back to the previous close: for a gap up, when a later session’s low reaches it, and for a gap down, when a later high does. A partial fill reaches into the gap without touching the previous close. A fill measures how much of the move was given back; it does not tell you what comes next.
In the figure, the common gap is filled the next session, when the low of session 22 reaches 30.95, below the previous close of 31.00. The exhaustion gap is filled two sessions after it opened. The breakaway and runaway gaps stay open to the end of the figure.
securityType = "Stock" and gapPct >= 3 and low <= previousCloseGap ups of at least 3% that were filled during the same session: the session low reached the previous close.
securityType = "Stock" and gapPct >= 3 and low > previousCloseGap ups of at least 3% whose session low stayed above the previous close, so the opening gap was still open at the close.
Counter-example: “gaps always get filled” is a saying, not a rule. Many gaps are revisited eventually, but eventually can mean months later, after the move has run its course, and a breakaway gap that stays open is doing what its definition describes.
A research checklist for gaps
Gaps are easy to find and easy to misread. Use the same steps for each one, so that a common gap inside a range is not treated like a breakaway, and keep a record of what followed to build your own reference set.
- Find gaps with a
gapPctrule and note each gap’s size and volume ratio. - Open the chart and name the context: a range, an early trend, the middle of a trend or late in a run.
- Check whether it is a full gap by comparing the session low with the previous high.
- Compare the gap with the stock’s usual movement using
atrPct14. - Check the company’s investor-relations page for an earnings release or other news that session.
- Record the previous close as the fill level, and count the sessions until it is filled.
- Classify the gap only after enough sessions have passed to see what followed it.
A gap in one direction followed by a gap in the other leaves an isolated group of bars, covered in the island reversal pattern guide.
Continue with
Sources
- Robert D. Edwards and John Magee, Technical Analysis of Stock Trends (first published 1948)
Read our data and methodology notes for calculation context. This guide explains research tools and observations. It does not recommend a trade or investment.