Breakaway versus exhaustion: classify the skip from both sides

What a gap is

A gap is the skipped price interval created when the next session opens beyond the prior session's traded range, in either direction. Gap analysis treats that untraded price band as a market non-event that can be as informative as the prices that did trade.

The hole is not classified from the skip alone. It is classified from the price-volume shape on either side of the skip.

Breakaway and exhaustion labels

A breakaway gap is the skipped interval that appears as price leaves a sideways area and is read as the start of a directional move. On price-volume box charts, that reading is used when an ordinary-shaped box precedes the skip and a tall, thin easy-movement box follows it. Easy movement is a tall, thin price-volume box in which price covers a wide range without needing heavy volume.

An exhaustion gap is identified when an easy-movement box precedes the skip and a short, wide difficult-movement box follows it, marking a stall after an extended run. Difficult movement is a short, wide price-volume box in which heavy volume produces little net price progress.

The first case-study chart

In the first case-study chart, successive gaps are classified by the change in box shape across each skip. The sequence includes an upside departure from a range, later stalls that precede declines, and a downside departure from congested square boxes.

Editorial reading: the departures match the breakaway pattern of leaving a sideways area. The stalls match the exhaustion pattern of easy movement giving way to difficult movement. Each label stays open until later structure supports or contradicts it.

The second case-study chart

In the second case-study chart, a late downward gap after an extended advance, with weaker support and a broken rising trendline, is classified as a downside breakaway rather than durable support.

Editorial reading: how late the skip appears in the advance is not enough to name it. The flanking structure, weaker support, and the broken rising trendline keep the downside breakaway label in place, still as a hypothesis that later structure can disprove.

One facet of the chart

Gap readings are presented as one chart facet that must be checked against other structure, not as a complete standalone system. Editorial reading: that is why a breakaway or exhaustion label should remain a working hypothesis rather than a finished conclusion.