Gap is the "gap" in the price chart caused by jumping up or down in price. This can be caused by an imbalance of demand and supply in the Forex market. A gap is essentially a price fluctuation. The reason for the gap is that the close of the old candlestick chart and the close of the new candlestick are very different. Especially during periods of extreme price volatility.
In the Forex market, gaps can be divided into 4 types. 1. Common Gap This type is a normal GAP (the name is already telling), which is generally the price chart before this type of GAP is not significant. It's a common gap that will return to normal within a few days. Most of which can be found in the price range with up-down sideways. 2. Breakaway Gap This pattern is rarely found. Caused by the price chart breaking through (Breakout) in support or resistance. Or may run from a price that is sideways. In most cases, this type of gap is a sideway within a triangle. If there is a large amount of buying and selling, the price will go up or down. 3. Runaway Gap is a gap pattern that is commonly found after a breakaway gap, which usually occurs during an upward or downward trend. Obviously, if a runaway gap occurs, it will guarantee that the price direction or trend is strong. 4. Exhausting Gap Gap We must be careful with this pattern. Because it represents the end of the trend, a jump up or down of the last price in the form of an exhausting gap is a signal that the market is starting to exhaust. After that, the price chart moves to close the gap and finally changes direction.
For example The price chart is constantly moving in an upward direction. And after a while, there was a gap, and now we can't tell if this is a Runaway Gap or an Exhausting Gap, so we have to wait a while. to view price trends and determine whether they will increase or decrease. If the price falls to open a gap, we can now read that this is an exhausting gap and can also predict that the trend of the chart is going to change from up to down.