Gaps: Common, Breakaway, Runaway and Exhaustion

A gap is an empty space on the chart where no trading took place: one period opens well above the previous high or well below the previous low. Gaps happen when new information arrives while a market is closed or when orders pile up faster than price can move smoothly. How often you see them depends heavily on which market you trade.

Where gaps appear in our markets

Major crypto assets such as BTC trade around the clock, every day of the year, so true gaps between sessions are rare on most crypto exchanges. One exception is crypto futures on traditional exchanges, which have trading breaks and can show gaps that the spot market never had.

Spot forex and spot gold trade almost continuously from Monday to Friday but pause over the weekend. If important news breaks on a Saturday, EUR/USD or XAU/USD can open on Sunday evening at a noticeably different price from Friday's close. These weekend gaps are the most common kind in these markets. Short daily breaks and holiday sessions can also create small gaps on some platforms. Keep in mind that different brokers can show slightly different gaps, because their price feeds and session times differ.

Four types of gap

Common gap

A small gap inside a range, with no special news or follow-through. Common gaps are often filled quickly, meaning price returns to cover the empty space. They carry little information.

Breakaway gap

A gap that jumps out of a range or chart pattern, usually with increased activity. It marks the start of a new move and is often not filled for some time. A breakaway gap out of a long rectangle is far more significant than a gap in the middle of one.

Runaway gap

Also called a measuring or continuation gap, it appears in the middle of a strong trend, when eager participants push price further without a pause. It suggests the trend still has strength.

Exhaustion gap

A gap in the direction of the trend that appears late in a long move, followed soon by a reversal that fills it. It reflects a final burst of enthusiasm or panic before the move runs out. It can only be identified with confidence afterwards, which is why it should not be traded on its own.

Practical points

• Gaps are a risk to stops. A stop order cannot be filled inside a gap; it fills at the first available price, which can be worse than planned. Holding forex or gold positions over the weekend carries this risk.
• "Gaps always fill" is a myth. Many get filled, but breakaway and runaway gaps can stay open for a long time.
• Context decides the type. Where the gap sits relative to the trend and recent patterns is what tells you which type it may be.

Key takeaways

• A gap is a price area with no trading, usually caused by news while a market is closed.
• BTC trades 24/7, so gaps are rare in spot crypto; forex and gold mainly gap over weekends.
• Common gaps say little; breakaway and runaway gaps support a move; exhaustion gaps warn of its end.
• Stops can be filled at worse prices across a gap.
• Not every gap fills; judge each one by its context.