runaway gap

runaway gap

In technical analysis, a chart pattern that indicates the rapid price movement of a security and is characterized by a gap that forms for a range of prices in which no trading occurs. Runaway gaps occur during strong bull or bear movements on high volume. In general, technical analysts believe a security's price will return to the price range at which a gap occurs to fill in the missing prices. Thus, a strong upward movement with a runaway gap is likely to be followed by a downward correction to the price at which the gap occurred. A downward runaway gap signals the opposite correction. Compare breakaway gap. See also exhaustion gap.