List of Financial Market Terms

An Exhaustion Gap is a technical analysis term that suggests a stock is tired of the current trend (hence "exhaustion).  Exhaustion Gaps can be found in an uptrend as well as a downtrend.  In an uptrend, this suggests the trend may reverse to the downside, and vice versa with regard to a downtrend. 

Let's take a look at an image of the AAPL 1 year chart:

exhaustion gap in apple stock

As you can see, the stock was uptrending strong. There was a recent gap to the upside that initially indicated potential acceleration in the trend.  That gap was quickly filled, indicating the trend may be tired and it may be time for a correction.  This is a perfect example of an Exhaustion Gap.

This method of analysis can be applied to day trading, swing trading, futures trading, and options trading.

Related terms: Breakaway Gap, Runaway Gap, Gap Fill, Bull Trap, Bear Trap, Jekyll & Hyde

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