What Is Gap Up?
A gap up occurs when an asset opens higher than the previous bar's high, with no trading in between. Visually, there's a blank space between the prior bar's high and the current bar's low. Gaps usually come from overnight news, earnings announcements, or pre-market trading activity that isn't shown on the regular chart.
Types: common gaps (small, often filled within days), breakaway gaps (from consolidations, often unfilled), runaway gaps (mid-trend continuation), and exhaustion gaps (often at trend ends, fading quickly). The gap's location relative to chart structure matters more than the gap's existence alone.
'Gap-and-go' is a classic intraday strategy: buy stocks gapping up with strong volume on positive news, ride the early momentum. The opposite, 'gap fill,' bets the gap closes — fading the open. Both work in different regimes; neither works always. Volume and prior trend structure tell you which framework fits.
Related terms
- Breakout — A price move beyond an established support, resistance, or chart pattern boundary.
- Earnings Report — Quarterly publication of a company's financial results.
- Volume
- Trend — The general direction of price movement over a period — uptrend, downtrend, or sideways.