A gap is when the stock moves up or down beyond the range of the previous candle without touching the high or low of that last candle.
Gaps most often occur on daily charts, but they can technically happen on any timeframe.
For example, a stock may gap up in the morning at the open. Most often, although not always, the gap will get filled, and sellers will immediately take profit and the price will fall back and test the previous days high.
A gap is NOT when a stock makes a continous fluid movement and then has a retracement. That is called consolidation and can take the form of retracement or flagging.
Retracement usually happens at fib levels of 38.2%, 50% or 61.8% of the previous leg.
Flagging is a type of consolidation and can sometimes represent the first fib level of 38.2% but can also be shallower then that if it's a strong stock with lots of volume.
