A price gap occurs when a price bar’s low is above the previous bar’s high (an “up gap” or “gap higher”) or its high is below the previous bar’s low (a “down gap” or “gap lower”). Generally, up gaps in uptrending markets are considered signs of strength, while down gaps in downtrending markets are viewed as evidence of weakness.

Gaps are often referred to by specific names — e.g., common gap, breakaway gap, running or measuring gap, and exhaustion gap — depending on the market context in which they appear. On candlestick charts, gaps are called “windows.”

A variation of the basic gap is the “opening gap,” which occurs when price opens outside the range (above the high or below the low) of the previous bar. However, opening gaps can close very quickly, after which no true bar-to-bar gap will exist.