Corn Closes The Gap

Breakaway gaps highlight the start of a new trend. Volume rises substantially above the prior day and price gaps upward and continues rising (or falling in the case of a descending price gap) forming new highs (or lows).

This type of gap gets its name from its tendency to occur within a trading area or price congestion pattern ... Such pattern gaps are usually closed within a few days, and for obvious reasons, before the congestion formation in which they appeared is completed and prices break away from it. But not always. Sometimes a gap will develop in the last traverse of prices across the pattern area just before a breakout, and in such cases, it is not closed for a long time, nor is there any reason why it should be.

The forecasting significance of common or pattern gaps is practically nil. They have some use to the technician simply because they help him recognize an area pattern — that is, their appearance implies that a congestion formation is in process of construction.