Types of Gaps 

Gaps happen when demand exceeds supply suddenly or exact opposite to it i.e supply increases many times against very less demand.

Gaps reveals the underlying strength or weakness. They are classified as:

Break out gap:

In this type market opens beyond breakout point and keeps going in that direction.

Runaway gap:

Prices for the second time gap up or gap down and continue to run higher or lower. It should hold the highs or lows to qualify.

Exhaustion gap:

Prices continue for another gap up but unable to sustain, giving away the underlying supply exceeding the demand, thereby a reversal.

Prices continue for another gap down but unable to sustain, giving away the underlying demand exceeding the supply, thereby a reversal.