# Gaps

Gaps are patterns that occur when there is a significant increase or decrease in a stock's price, creating a space between two trading periods. They can be a sign of a potential trend reversal. There are three main types of gaps: Breakaway gaps, runaway gaps, and exhaustion gaps.

Breakaway gaps occur at the beginning of a trend, when there is a sudden increase or decrease in price that creates a gap. This can be caused by a significant news event or other market factors. Runaway gaps occur during the middle of a trend when the price continues to move strongly in one direction, creating a gap in the chart. Exhaustion gaps occur near the end of a trend when the market is starting to lose momentum, and the price begins to move in the opposite direction.

<figure><img src="/files/5bsQtNba4EpYCEcuOSEQ" alt=""><figcaption></figcaption></figure>

It's important to note that gaps can be filled, which means that the price may move back to fill the gap at a later time. Traders should also use other forms of analysis and risk management techniques to make informed trading decisions, as false signals can occur, and gaps may not always be a reliable indicator of a trend reversal.


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