Breakaway Gap

Breakaway Gap is a term used in technical analysis. A breakaway gap often signals a new and significant development on a stock chart.  A breakaway gap may result in a very bullish or bearish trend going forward.

Breakaway Gap

Breakaway Gap is a term used in technical analysis. A breakaway gap often signals a new and significant development on a stock chart.  A breakaway gap may result in a very bullish or bearish trend going forward.


Breakaway Gap Identification

A Breakaway Gap occurs when the stock price jumps outside of a recent trading range or consolidation area.  This may happen when a stock opens well above any high made recently or well below any low made recently.  Breakaway gaps are not filled quickly, and leave a blank space on the stock chart.

Stock chart showing a breakaway gap

Breakaway Gap Interpretation

A breakaway gap often occurs as a resolution to common chart patterns, as traders identify a pattern and rush to be the first into the trade.  Identifying breakaway gaps properly can lead to very reliable trading signals, particularly when they occur on high volume.

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