AI Detection of Price Gaps: Classifying Breakaway, Runaway, Exhaustion, and Common Gaps

A price gap is the space between two consecutive bars where no trade occurred - price opened at $105 when the prior day's high was $102, and nothing traded in between.

Each gap type carries a distinct statistical profile. A breakaway gap signals the start of a new trend. An exhaustion gap marks its end. A runaway gap confirms the middle. A common gap is noise.

They all look the same on a raw chart. That is where AI classification comes in. A model trained on thousands of labeled gap instances distinguishes the four types by reading volume context, trend structure, and gap positioning.

This post covers how TradingLens classifies gaps, the exact rules for trading each type, and why gap fill probability is meaningless without type classification.

AI is a tool, not a replacement for your judgment. Every trade decision is yours.

---

The Four Gap Types#

A gap in isolation tells you nothing. A gap in context tells you everything.

Breakaway Gap#

Canonical definition: A price gap that occurs when price breaks decisively out of a consolidation range or chart pattern (triangle, rectangle, flag) on significantly above-average volume.

The AI checks three conditions:

1. Geometric: Price was range-bound for at least 10-20 bars before the gap. The gap exits the range completely - the low of the gap candle is above the prior range high (bullish) or the high is below the prior range low (bearish).
2. Volume: Volume on the gap bar is at least 1.5x the 20-bar average. Institutional participation confirms the breakout is real.
3. Positioning: The gap occurs at a structural boundary - a trend line, a horizontal support/resistance level, or the apex of a contracting triangle.

Entry rule: Enter on a close beyond the gap edge. For a bullish breakaway gap, enter long when price closes above the high of the gap candle. The gap edge is the close trigger - wicks that touch the gap area do not qualify.

Stop-loss rule: Place the stop below the low of the gap candle for a long. For a short, place it above the high of the gap candle. The stop lives beyond the gap edge, not inside it - a close back into the gap invalidates the breakout.

Target rule: Measured move = height of the prior consolidation projected upward from the breakout level.

Numerical example: A rectangle spans $50 to $60 over 15 bars. Price gaps up and closes at $63. Measured move target = top of range ($60) + range height ($10) = $70.

R:R floor: This pattern is only tradeable if R:R ≥ 2:1. If the stop distance is $3 (entry at $63, stop at $60) and the target is $70 (reward $7), the ratio is 2.3:1 - acceptable.

Invalidation rule: The pattern is dead if price closes back below the top of the prior consolidation range (for a bullish breakout) or above the bottom (for a bearish breakout). A return into the gap area means the breakout failed.

Time horizon: 2-10 bars for the gap to resolve on the chosen timeframe. Breakaway gaps on daily charts tend to hold for weeks; on 15-minute charts they resolve within a session.

Fill probability: Low. Breakaway gaps are the least likely to fill because they mark a structural regime change. Fewer than 20-30% of true breakaway gaps fill within 20 bars (on the same timeframe as the chart being analyzed).

---

Runaway (Measuring) Gap#

Canonical definition: A gap that occurs mid-trend, confirming the trend's strength and typically appearing halfway through the total move.

The AI checks:

1. Geometric: The gap appears after a well-established trend - at least 5-10 bars of trending price action with higher highs and higher lows (uptrend) or lower highs and lower lows (downtrend).
2. Volume: Volume is elevated but not necessarily as extreme as a breakaway gap. The key signal is that volume on the bars following the gap remains elevated - momentum is sustaining.
3. Positioning: The gap sits where prior resistance has become support (uptrend) or prior support has become resistance (downtrend). It is past the structural boundary, not at it.

Entry rule: Enter on a close above the gap candle's high (long) or below its low (short). The close must confirm the gap direction.

Stop-loss rule: Place the stop below the low of the gap candle (long) or above the high (short). The stop lives beyond the gap edge.

Target rule: Measure the distance from the start of the trend to the gap (the close of the gap candle), then project that same distance forward from the gap level.

Numerical example: An uptrend starts at $100. A runaway gap appears at $150. Measured move = $150 + ($150 − $100) = $200 target.

R:R floor: R:R ≥ 2:1. Runaway gaps in strong trends often deliver 3:1 or better.

Invalidation rule: Pattern is dead if price closes back into the gap - a close below the gap candle's low in an uptrend, or above the gap candle's high in a downtrend.

Time horizon: 3-15 bars. Runaway gaps in strong trends resolve faster than breakaway gaps because momentum is already established.

Fill probability: Moderate. Runaway gaps fill more often than breakaway gaps but less often than common or exhaustion gaps. In an established trend, the gap may go unfilled for the entire move.

---

Exhaustion Gap#

Canonical definition: A gap that appears near the end of a trend, often on extremely high volume, signaling that the last surge of buying (or selling) has exhausted itself.

The AI checks:

1. Geometric: The gap occurs after an extended trend - a long run of parabolic or near-vertical price action. The gap candle often has a long upper wick (bullish exhaustion) or lower wick (bearish exhaustion), indicating rejection at the extreme.
2. Volume: Volume is 2x-3x the 20-bar average or more. This is the highest volume of the entire trend. The high volume combined with a stalled or reversing candle is the critical signal.
3. Positioning: The gap is at the extreme end of the trend, often at a round number or prior all-time high/low where retail buying climaxes.

Entry rule: Enter short on a close below the low of the exhaustion gap candle (bullish exhaustion), or long on a close above the high (bearish exhaustion). Wait for a confirmation bar - the exhaustion gap requires a follow-through bar in the reversal direction.

Stop-loss rule: Place the stop above the high of the exhaustion gap candle for a short, or below the low for a long. Exhaustion gaps can have violent intraday reversals, so the stop must account for the high-volume wick.

Target rule: Project back to the start of the final trend leg. Typically the gap fills completely and price retraces 50-100% of the prior move.

Numerical example: A stock runs from $80 to $120 in 20 bars. An exhaustion gap appears at $120 on 3x average volume with a long upper wick. Target = retrace to the $100-$105 area (50% retrace of the final leg).

R:R floor: R:R ≥ 2:1. Exhaustion gaps are reversal setups - the reward target is often achievable within a few bars.

Invalidation rule: Pattern is dead if price closes beyond the extreme of the exhaustion candle - above the high for a bullish exhaustion, below the low for a bearish exhaustion.

Time horizon: 1-5 bars for confirmation, 5-15 bars for the full reversal to play out.

Fill probability: High. Exhaustion gaps fill approximately 80-90% of the time because they represent the final push of a dying trend. The gap is usually filled within 3-10 bars.

False-positive caveat: Exhaustion gaps are the most common false-positive in AI gap classification. The same visual gap - a high-volume gap at an extreme - can be classified as exhaustion or breakaway depending on whether the AI reads the prior trend as "extended" or "consolidating before continuation." Classification itself is where the AI adds value. Raw gap detection (a blank space between candles) is trivial; telling you which kind of gap it is requires trend context, volume analysis, and pattern recognition. No classifier is 100% accurate on exhaustion vs. breakaway when volume is ambiguous. This ambiguity is precisely why TradingLens outputs a probability distribution instead of a hard label.

---

Common Gap#

Canonical definition: A gap that occurs in a range-bound or low-volume market with no structural significance.

The AI checks:

1. Geometric: Price is in a consolidation zone - no clear trend, no pattern breakout. The gap does not exit a recognizable pattern boundary.
2. Volume: Volume is average or below average. The gap has no institutional footprint.
3. Positioning: The gap is in the middle of a range, away from structural levels.

Skip common gaps - they fill too quickly to structure an R:R ≥ 2:1 trade.

Fill probability: Near 100%. Common gaps fill almost immediately, often within 1-3 bars.

---

Gap Classification - What Makes It an AI Problem#

Gap detection is trivial. Every charting platform can find gaps. Classification is hard - the same $2 gap on a daily chart can be breakaway, runaway, exhaustion, or common depending on what happened before and what volume accompanied it.

An AI that classifies gaps reads 30-50 bars of context, calculates trend strength, compares volume to the trailing average, checks position relative to structural levels, and assigns a probabilistic label.

The four types are not mutually exclusive. A gap that opens a new uptrend on the highest volume in six months might get: 65% breakaway, 20% exhaustion, 10% runaway, 5% common. You decide which scenario to trade.

TradingLens outputs a classification matrix with confidence scores and supporting evidence - volume ratio, trend context, structural position - so you can evaluate the classification yourself.

---

Gap Fill Probability - Why Type Classification Matters#

One number - "gaps fill X% of the time" - is the single most misleading statistic in gap trading.

Here is the truth by type:

Type	Fill Probability	Typical Time to Fill
Breakaway	Low (< 30%)	May never fill during trend
Runaway (Measuring)	Moderate (40-60%)	5-15 bars
Exhaustion	High (80-90%)	3-10 bars
Common	Near 100%	1-3 bars

If you aggregate these, you get a number like "60% of gaps fill" - but that number is useless. A strategy that shorts every gap expecting a fill would lose badly on breakaway gaps (which don't fill) and win on common gaps (which do). A strategy that holds through every gap expecting continuation would win on breakaway gaps and lose on exhaustion gaps.

Gap fill probability without type classification is not actionable. It creates a false sense of statistical edge where none exists. Every gap trade must begin with a type classification, and every type classification must come with a probability estimate, not a binary label.

---

When NOT to Trade Gaps#

Counter-trend gaps. A gap against the dominant trend is statistically suspect. If the daily trend is bearish and you see a bullish gap, treat it as a potential exhaustion or common gap - not a breakaway. Counter-trend gaps have a much higher fill rate and rarely initiate sustainable moves.

No-volume gaps. A gap on below-average volume is a common gap until proven otherwise. Do not classify it as breakaway or exhaustion just because it looks visually significant. Volume is the primary discriminator.

News-event gaps. Gaps caused by earnings or macroeconomic releases are fundamentally different from technical gaps. They are driven by information, not market structure. Classification models trained on technical gaps perform poorly on event-driven gaps because volume context is distorted and structural context is irrelevant.

Premature entry. Do not enter a gap trade on the open. Wait for a close beyond the gap edge. The first few minutes of a gap day are the most volatile - price can spike through levels and reverse within the same bar.

---

Asset Class Applicability#

Gap analysis is stocks and equity-ETF specific. The entire framework was developed for equity markets with defined trading sessions and overnight breaks where gaps accumulate.

Crypto (BTC, ETH, altcoins): Gaps do not exist on intraday crypto charts. The market trades 24/7/365. Applying gap analysis to a 1-hour or 4-hour BTC chart is a category error. The only exception is the Sunday-to-Monday weekly open on some centralized exchanges that pause settlement.

Forex: The forex market is continuous Monday through Friday. True gaps do not occur on intraday forex charts. The exception is the Sunday open (Tokyo session after the weekend close) where liquidity gaps can appear. These behave most similarly to common gaps - they fill quickly.

Futures: Gaps exist on futures charts (defined session opens and closes) and behave similarly to equity gaps. The same four-type classification applies. Overnight gaps on equity index futures often fill within the next session and behave more like common gaps than breakaways.

Bottom line: If you trade equities or equity ETFs on daily or lower timeframes, gap analysis is a first-class tool. If you trade crypto intraday, use other patterns - gap analysis does not apply.

---

Summary Table#

Type	Entry	Stop	Target Rule	Invalidation	Time Horizon	Fill Prob.	Volume
Breakaway	Close beyond gap edge	Below gap low / above gap high	Consolidation height projected	Close back into prior range	2-10 bars	< 30%	≥ 1.5x avg
Runaway	Close beyond gap edge in trend dir.	Below gap low / above gap high	Trend-start to gap projected forward	Close through gap opposite	3-15 bars	40-60%	Above avg, sustained
Exhaustion	Close beyond + confirm bar	Above gap high / below gap low	Retrace to start of final leg	Close beyond gap extreme	5-15 bars reversal	80-90%	2-3x avg
Common	None (skip)	Range boundary	Opposite range edge	Close beyond range	1-3 bars	~100%	Avg or below

---

Your Next Chart#

Gap classification is one of the places where AI genuinely outperforms manual analysis. The human eye sees "blank space between candles." A trained model sees 50 bars of context, volume ratios, structural alignment, and a probability-weighted type assignment. The output is a specific, tradeable plan with entry, stop, and target - not a vague "gap detected" label.

Upload a daily chart and ask TradingLens to classify gap types. See whether the model agrees with your read - and whether it catches gaps you missed.

---

Ready to classify the gaps on your watchlist? Open TradingLens, upload a daily chart, and let the AI flag every gap with type classification, confidence scores, and a complete trade plan. Entry, stop, target, and fill probability - all in one click.

AI is a tool, not a replacement for your judgment. Every trade decision is yours. Trade responsibly.