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runaway gap

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Runaway Gap
A type of gap on a price chart that occurs during strong bull or bear movements characterized by an abrupt change in price and appearing over a range of prices. They are best decribed as gaps caused by an sudden increase/decrease in interest for a stock.

The image shows a gap in the middle of a large upward movement.

Notes:
Sudden price changes are expected during strong bull and bear markets. However, most analysts view these gaps as temporary, expecting prices to converge upon the range in which the gap occurred in order to fill the missing segments.


runaway gap
In technical analysis, a chart pattern that indicates the rapid price movement of a security and is characterized by a gap that forms for a range of prices in which no trading occurs. Runaway gaps occur during strong bull or bear movements on high volume. In general, technical analysts believe a security's price will return to the price range at which a gap occurs to fill in the missing prices. Thus, a strong upward movement with a runaway gap is likely to be followed by a downward correction to the price at which the gap occurred. A downward runaway gap signals the opposite correction. Compare breakaway gap. See also exhaustion gap.
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runaway gap

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