Chartered Market Technician (CMT) Practice Exam 2025 – Your All-in-One Guide to Exam Success!

A breakaway gap is characterized by a sudden price movement that occurs after an established trend has been in place, typically occurring at a point of clear resistance or support. This type of gap signifies a strong shift in market sentiment and often indicates the beginning of a new trend.

When the price abandons a level of support or resistance, it does so with increased volume, reflecting a decisive move by market participants. This can happen, for example, when a stock breaks out from a consolidation phase, leaving behind a price level that traders might have previously considered a significant barrier. This behavior typically suggests that new information or sentiment has entered the market, causing participants to reassess the asset's value, which can lead to a continuation of the new direction established by the gap. Understanding the role of breakaway gaps is integral for technical analysis, as they mark crucial turning points in the price movement of assets.