Lesson T4.5 · 5 of 7 · Trend, support and resistance
Price gaps explained: the four types, island reversals and gap fills
A price gap appears when today’s whole candle sits above yesterday’s high or below yesterday’s low. It leaves an empty space. Its location tells you what it means: inside a range it usually fills quickly, at the start of a trend it rarely does, and at the end of a trend, on heavy volume, it can signal exhaustion.
Terms in this lesson
- Trading volume
- How many shares were bought and sold in a day.
- Quarterly earnings
- The three-month figures listed companies publish four times a year.
- Support and resistance
- Prices at which a stock has often stopped falling or stopped rising.
What is a price gap?
Definition
What is a price gap?
A space on the chart where no trading took place.
Gap up: today’s low is above yesterday’s high. Gap down: today’s high is below yesterday’s low. Gaps usually appear when news breaks while the market is closed, such as quarterly results released after the close: the next morning the price opens straight at a new level. Some people also call any open above yesterday’s close a gap; this lesson uses the strict definition, based on the high and the low.
Eight candles. The third has its high at 103.90; the fourth opens at 105.40 and its low is 105.20. Nothing traded between 103.90 and 105.20: that is the gap. The price then keeps rising.
A gap fills (or closes) when the price later comes back and trades through the whole empty space. For a gap up, that means a later candle drops to the high from before the gap.
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Create a free accountTypes of gaps: common, breakaway, runaway and exhaustion
- Common
- Breakaway
- Runaway
- Exhaustion
The price stays between 100 and 104 for 11 days; a small gap up appears inside the range and fills two days later. Then a gap up on heavy volume takes the price out of the range and the trend rises. Midway through the rise there is a second gap up. At the end, above 121, a third gap appears on the heaviest volume; two days later the price falls, fills the gap and keeps falling.
| Type | Where it appears | What it shows |
|---|---|---|
| Common (area) | inside a sideways range | very little; it usually fills within a few days |
| Breakaway | as the price leaves a range | the start of a new trend, usually on heavy volume |
| Runaway (continuation) | midway through a fast move | the trend is keeping its pace |
| Exhaustion | at the end of a long trend | the last wave of buyers or sellers, on very heavy volume |
You only know the type for sure afterwards: an exhaustion gap looks exactly like a runaway gap at first.
How often do price gaps fill?
You often hear that “every gap gets filled”. Thomas Bulkowski checked more than 1,100 gaps in US shares during rising markets (bull markets). How many filled within the first week:
| Type | Filled within a week (up / down) | Median time to fill (up / down) |
|---|---|---|
| Common | 85% / 90% | 3-4 days |
| Breakaway | 1% / 1% | 89 / 84 days |
| Runaway | 8% / 15% | 45 / 25 days |
| Exhaustion | 60% / 66% | 6 / 5 days |
Historical statistics on US shares, not guarantees. “Up” = gaps up, “down” = gaps down.
What is an island reversal?
Definition
What is an island reversal?
A few candles cut off from the rest of the chart by two gaps in opposite directions.
Island top: after a rise, a gap up, a few days higher up, then a gap down. The island bottom is its mirror image, after a fall. The two gaps must share at least some of the same prices. An island can last a single day or several months, and volume is usually heavy on the day of the second gap.
The price rises from 90 to about 97.60. A gap up follows: for four days it trades between 98.60 and 100.40. Then comes a gap down on heavy volume: the price opens at 98, below the island, and falls towards 92.50. The two gaps share the prices between 98.30 and 98.60.
Lessons are educational. They are not a recommendation to buy or sell. Investing involves risk and you can lose money. Sources: Thomas N. Bulkowski, thepatternsite.com (Gaps; Island Reversals), accessed 29 October 2026. The charts are teaching diagrams, not real prices.