There are four other main types of Gaps.

Common Gaps – occur independent of fundamental and technical factors and as the name suggests, are very common. Common gaps are usually accompanied by low volume as there is no major event that precedes the gap. This type of gap is filled quickly and provides few trading opportunities.

Breakaway Gaps – are when the price of a financial asset breaks, or gaps through support and resistance levels. They mainly occur when the price is about to move out of a trading pattern or has been trading sideways for quite some time. Breakaway gaps are characterised by strong volume and usually confirm that a new trend has been established.

Continuation or Runaway Gaps – are identified by the continuation of an already bullish or bearish pattern in the same direction. They are usually caused by fundamental events (such as a positive news announcement) that confirm the sentiment and strengthen the trend. Continuation gaps propel the current trend and offer opportunities for traders who may have previously missed the beginning of the trend, to join the trend as it continues.

Exhaustion Gaps – usually appear near the end of a well-established trend. For example, aware that a downward trend may be coming to an end, buyers come in large volumes which causes the price to sharply rise and ultimately starting a new trend in the opposite direction.