Gaps are not just empty space on a chart. They are moments when supply and demand fall out of balance, forcing price to rapidly reprice.
In Senior Market Strategist John Rowland, CMT’s recent webinar on Gap Theory, the focus is on one of the most powerful — and misunderstood — gap types: breakaway gaps.
These are the gaps that matter because they often mark the start of a new trend, not the end of an old one.
What Makes a Gap a “Breakaway” Gap?
Not all gaps are created equal.
Most daily gaps fall into a routine range — typically 0.5% to 1.5% — which reflects normal market noise. Breakaway gaps stand out because they “break away” from that structure.
A breakaway gap is defined by three core traits:
- Price gaps out of a defined range or consolidation
- The gap occurs alongside meaningful price displacement
- It appears early in a potential new trend, not after an extended run
That’s why context matters more than the gap itself.
Where to Find Breakaway Gaps on Barchart
John starts with one of the most underutilized tools on the site:
Stocks → Performance Leaders → Gap Up / Gap Down
This page instantly shows stocks that have gapped during the current session. On active days, that list can include hundreds of candidates, so the real edge comes from screening.
Narrowing the List: The Screening Process
To isolate potential breakaway gaps, John layers in time-based structure and price significance.
1. New Highs as Confirmation
He filters for:
New monthly highs
Made during today’s session
This ensures the gap is not just noise, but a move into new price territory.
2. Gap Size Matters
John looks for gaps of 2% or more, because:
- Smaller gaps often fade
- Larger gaps signal real imbalance
For higher-volatility stocks, he suggests comparing the gap size to Average True Range (ATR % of price) to ensure the gap is proportional to the stock’s normal movement.
3. Clean Up the Universe
For clarity and tradability, John removes:
- ETFs
- OTC names
- Non-common shares
What’s left is a focused list of individual stocks showing unusual price behavior worth investigating further.
Why Breakaway Gaps Are Different
Breakaway gaps tend to occur:
- Early in a trend
- After price compression
- Before momentum is fully recognized
That’s why they are often followed by:
- Trend continuation
- Expanding volume
- Strong follow-through
But they still require confirmation — gaps are signals, not strategies on their own.
The Bigger Lesson
John’s process isn’t about predicting outcomes. It’s about putting probability on your side.
Instead of scanning charts one by one, this approach:
- Lets the market surface opportunity
- Uses objective filters to reduce noise
- Keeps traders aligned with price, not opinion
That’s the real power of combining Gap Theory with structured screening.
Watch the clip to see John build this breakaway gap screener:
- Stream the full webinar to learn how to trade gaps from continuation to exhaustion
- Turn on notifications so you don’t miss the next live free webinar with John Rowland
On the date of publication, Barchart Insights did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. For more information please view the Barchart Disclosure Policy here.
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