Gaps are basically of four types.
First is the common gap which is usually of little significance. It happens during periods of consolidation and gets filled up quickly and does not assume too much importance.
Second is a breakaway gap. This is a very important occurence in a stocks breakout. Stocks which have been stuck in trading range for long periods of time break out with gaps and then undergo strong change in trend from sideways to up. (or down as the case may be. ) Sometimes this gap remains unfilled if it is a small gap. If its a huge gap, there is often an attempt to fill the gap and part of it gets filled up. On some ocassions, the gap gets filled completely but the upmove resumes after this happens.
Third is the runaway gap. In strong uptrends where there are big upmoves, its common to see stocks gap up and move fast. This is an indication of strong momentum in the stock.
And the fourth is the exhaustion gap. After a prolonged rally stocks gap up only to correct and promptly fill up the gap and ultimately experience a halt or reversal in the upmove. This is often warning sign during an upmove.
An important even in the theory of gaps is ISLAND REVERSAL. Here suppose on the way down, there is a gap left behind between say price of 100 and 102. Now when the trend reverses, sometimes during the upmove, the stock gaps up within the same zone, say 100 to 103, or 100 to 102. This event is called island reversal and this zone often acts as a strong indicator of trend change and subsequently becomes a strong support.
@Anshan I dont track thirumalai chem too closely.
@Malhar_Manek I have mentioned books I prefer multiple times on this thread and on another thread specifically about investing books.