What is a breakaway gap?

A breakaway gap is a term used in technical analysis which identifies a strong price movement through support or resistance. A gap is the difference between the open price and prior close price, where no trading activity takes place. The price breaks away from the support or resistance via a gap, as opposed to an intraday breakout.

What is a breakaway gap in price action?

Many price action patterns have names that are not helpful. The breakaway gap is an exception. It helps you to remember what it is and how to identify it. Breakaway gaps must break away from something. From a price action perspective, it must break out of an area of consolidation.

How to trade with breakaway gaps?

Trading with breakaway gaps involves recognizing the market sentiment. It’s important to first identify the type of gap and the prevailing trend when trading with breakaway gaps. It provides a stronger trading signal if the gap aligns with the trend. Traders should seek confirmation signals to increase the probability of successful trades.