Price Gap
A break in a price chart where an asset's price jumps from one level to another with no trading occurring in between, often later followed by price moving back to partially or fully fill it.
A price gap appears on a chart when an asset's price jumps from one level to a noticeably different level between two consecutive trading periods, with no recorded trading activity occurring in between the two levels. Gaps are more common on markets with defined trading sessions and closures, since significant news or order flow occurring while trading is paused can cause price to reopen sharply higher or lower than where it closed — though gaps can still occur on 24/7 crypto markets during moments of extreme, sudden volatility or thin liquidity.
A commonly observed tendency is for price to later move back and "fill" a gap, retracing through the empty price range left behind, though this isn't guaranteed to happen, and some gaps — particularly ones driven by major, lasting news — are never filled or take a very long time to do so. Traders sometimes distinguish gap types by their context, such as a breakaway gap marking the start of a new trend versus an exhaustion gap marking a trend's likely final move before reversing.
Examples
- A price gap can form when major news breaks while a market is closed, causing the price to reopen sharply higher or lower than its previous close with no trading in between.
- While price often later moves back to fill a gap, this isn't guaranteed, and a gap driven by major, lasting news can remain unfilled for a very long time or never fill at all.