Gaps

When price skips a price.

A gap up: the open leaves a hole in the chart rgba(207,74,55,0.08) the gap opened far above the prior close A gap is a price range where nothing traded, because the market opened away from where it closed. It usually means news arrived while the market was shut, and everyone repriced at once. Breakaway gap Out of a range, on heavy volume, at the start of a move. The most significant kind. Runaway gap Mid-trend, as the move accelerates. Exhaustion gap Late in a trend, on frantic volume. Often the last gasp before a reversal. Filling the gap Price returning to trade through the empty range. Common, but not a law, and 'gaps always fill' is a folk belief rather than a rule. NEPSE has daily circuit limits, which changes gap behaviour: a stock cannot gap more than the limit allows, so extreme news can produce a series of limit moves rather than one large gap. Do not import gap intuitions from unrestricted markets.

Part of Learn NEPSE Investing, a free course on reading Nepali company accounts and charts. Section: Charts.