Gap types in trading: common, breakaway, runaway and exhaustion

What a gap in trading is

A gap is a price area where no trading took place. The next bar opens above the previous bar's high or below its low. Between them there is empty space on the chart.

Gaps appear when price moves while the market is closed or very thin, for example after news released overnight. In gap types forex discussions, keep the market's hours in mind. Major currency pairs trade around the clock on weekdays, so most forex gaps appear at the weekly open. Stock index and share CFDs (contracts for difference, which track a price without owning the asset) gap more often because their underlying markets open and close each day.

A gap is filled when price later trades back through the empty area.

The classification

The classic system sorts gaps by where they appear in a move, not by their size.

"Often" here describes the textbook convention. It is not a measured probability.

Example chart (drawn, no live prices)

• A: price moves sideways. Small gaps inside the range close within a few bars.
• B: price gaps out of the top of the range and does not return into it.
• C: the trend is under way. Another gap opens with no real pullback.
• D: after a long run, a final gap appears. Price then stalls and trades back through it.

Identification rules for each type

Common gap

• Appears inside a range, a congestion area or a slow session.
• No pattern breaks and no level breaks.
• Volume, where it is available, is ordinary.

Breakaway gap

• Opens beyond a clear boundary: the top or bottom of a range, a triangle, a rectangle or the neckline of a head and shoulders.
• Price holds outside the old boundary over the following bars.
• Volume on stock and index charts is often higher than usual.

Runaway gap

• Appears after the trend is already established, often after a breakaway gap.
• Comes with little pullback and orderly, directional bars.
• Is also called a measuring gap because of the convention below.

Exhaustion gap

• Appears after a long, steep move, often near a level that has acted as a boundary before.
• Follow-through after the gap is weak: small bars, long wicks and failure to make new extremes.
• Can be confirmed only in hindsight, once price fills it. If price then gaps the other way and leaves bars isolated above or below, the result is an island reversal.

The measured-move convention

Chart analysts often treat a runaway gap as sitting roughly halfway through a move. The convention is:

1. Measure the distance from the start of the move (often the breakaway point) to the runaway gap.
2. Project the same distance beyond the gap.

The projected level is a reference mark for planning and review, nothing more. Markets do not respect it in any reliable way. Many moves stop well short of it and others run far past it. Treat it as one input next to support, resistance and your own risk management plan.

Invalidation

A gap reading is wrong when price behaves against the label you gave it:

• Breakaway gap: price fills the gap and closes back inside the old range or pattern. The breakout reading no longer holds.
• Runaway gap: price fills the gap and keeps going. The trend reading weakens, and so does any measured-move projection based on it.
• Exhaustion gap: price does not fill it and the trend keeps extending. It was probably a runaway gap.

Decide your invalidation level before acting on a reading, not after.

Failure modes and false breakouts

• Labelling too early. At the moment it appears, a breakaway gap, a runaway gap and an exhaustion gap can look the same. The label usually becomes clear only later.
• Weekend forex gaps. These come from news over the closed period, not from a pattern breaking. They are often just common gaps.
• Low-liquidity gaps. Thin sessions and holidays create gaps that mean little.
• False breakouts. Price gaps beyond a boundary, then returns into the range within a few bars and traps breakout positions.
• Order fills. A stop or limit order can be filled at the first available price after the gap, which can be much worse than the level you set. This is slippage, and it can make a loss larger than planned.
• Data differences. Different price feeds and chart time zones can show gaps where others show none.

Trading leveraged CFDs and forex can lose money fast, and gaps are one of the ways losses grow beyond what a stop order was meant to limit. Gap patterns describe past price behaviour and do not show what price will do next. For the legal position of offshore trading in Pakistan, see Regulation and Safety.

Frequent questions

What is a gap in trading?

It is an empty area on the chart where the next bar opens beyond the previous bar's range, so no trades took place in between.

How is a breakaway gap different from an exhaustion gap?

A breakaway gap opens at the edge of a range or pattern at the start of a move. An exhaustion gap appears late in a long move and is usually filled soon after.

Do all gaps get filled?

No. Many are filled, but breakaway and runaway gaps can stay open for a long time. "Gaps always fill" is a saying, not a rule.

Why are gaps rarer in forex than in index CFDs?

Major currency pairs trade continuously on weekdays, so price rarely jumps between bars. Most forex gaps appear when the market reopens after the weekend.

Is the measured move a price target?

It is a charting convention that projects a distance for reference. It is not a forecast, and price often ignores it.

Where can I practise reading gaps?

On historical charts and on a demo account, alongside the patterns covered in Chart Patterns and Technical analysis.