GPS breaks back below 20-day moving average
Gap Inc. (GPS) Technical Analysis Report for Jan 23, 2020 | by Techniquant Editorial Team
Moving lower for the 4th day in a row, GPS finished Thursday at 17.81 losing $0.15 (-0.84%), underperforming the S&P 500 (0.11%). Ending the day with an indecisive close, neither buyers nor sellers were able to gain control during the session.
Daily Candlestick Chart (GPS as at Jan 23, 2020):
Thursday's trading range has been $0.40 (2.24%), that's below the last trading month's daily average range of $0.53. Things look different on the weekly timeframe, where the market's trading range of the last week has been above the market's average weekly trading range. The longer-term, monthly volatility is currently slightly lower than usual for GPS.
Two candlestick patterns are matching today's price action, the Takuri Line which is known as bullish pattern and one bearish pattern, the Bearish Spinning Top. The last time a Takuri Line showed up on November 21, 2019, GPS gained 4.44% on the following trading day.
Gap closed back below the 20-day moving average at 17.92 for the first time since January 9th.
Although the share is currently in a short-term downtrend, this could just be a correction, as both the medium and long-term trends are still bullish.
With prices trading close to this year's low at 17.02, downside momentum might accelerate should the market break out to new lows for the year.
Among the five market conditions that our pattern recognition engine identified today, the statistics for the Price Action based market condition "4 Consecutive Lower Closes" stand out. While it is usually interpreted as bearish, it has actually shown to be bullish for Gap. Out of 58 times, GPS closed higher 55.17% of the time on the next trading day after the market condition occurred. The optimal exit for swing trading this condition on the long side has been after 10 trading days, showing a win rate of 58.62% with an average market move of 1.25%.