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Continuation gaps, often referred to as runaway gaps, are recognized as occurrences that appear in the midst of an existing trend, typically signaling the persistence of that trend. These gaps emerge when there is a significant price movement that occurs overnight or when the market is closed, creating a gap between the previous closing price and the opening price of the current trading period.

The appearance of these gaps suggests that the underlying momentum of the trend is strong enough to push prices higher or lower despite temporary consolidations or pullbacks. Traders often interpret continuation gaps as indicators that the prevailing trend is likely to continue, and they can serve as entry points for positions aligned with the ongoing trend.

In contrast, gaps at the beginning of a trend are typically associated with new market dynamics, while gaps that signify a reversal indicate a change in the prevailing sentiment. Gaps that lead to prolonged consolidation imply indecision in the market rather than a continuation of a trend. Therefore, being aware of the context and placement of these gaps is critical for traders looking to leverage them for their trading strategies.