Price Action Gap After the price moves on its way for a period of time, this price jumps up somewhere in the middle of the movement, thus forming a second type of gap or series of gaps called a price action gap. This gap reveals the situation that the market is in when it moves with little effort and moderate trading volume. This gap indicates the strength of the market if the trend is upward, and indicates weakness if the trend is downward. This type of gaps works as support under the market for the following corrective movements. It is not often filled, and as is the case with a deviation gap from the general trend, closing below the price action gap is considered a negative signal in the upward trend.
The figure roughly illustrates the importance of studying the gaps to know the price direction and the location of those gaps