Common, breakaway, runaway, exhaustion. A gap is the admission that yesterday's price no longer lives in anyone's mind — volume and position tell its meaning.
A gap is a price range in which no trades occurred — opening between the previous bar's high and the next bar's low, or the previous low and the next bar's high. The Japanese term is mado ("window"); the English is "gap".
Gaps most often open between yesterday's close and today's open. When the market reopens after a weekend, an overnight, or a holiday, and participants' assessments have shifted enough, price jumps. A gap is the record of a discontinuity in consensus — "yesterday's price is no longer in anyone's head".
Four kinds are distinguished by their meaning. Common (the unremarkable gap inside a range), breakaway (the gap that launches a new trend out of consolidation), runaway (the gap that accelerates mid-trend), and exhaustion (the final outburst near the end of a trend). Position and volume separate the kinds.
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