Type of Important Gaps

There are three common types of gaps that frequently occur -
1. The breakaway gap
2. Runaway gap
3. The exhaustion gap.

Breakaway gap is a more significant gap that usually marks the beginning of new trend. It occurs when the price of a stock breaks a significant resistance.

Runaway gaps typically occur during strong bull or bear markets, where the price accelerates in the direction of the trend.

Exhaustion gap occurs towards the end of a trend, signaling the exhaustion of buying or selling pressure.