GPS runs into sellers again around 18.43
Gap Inc. (GPS) Technical Analysis Report for Feb 14, 2020 | by Techniquant Editorial Team
Moving lower for the 2nd day in a row, GPS finished the week 1.62% higher at 18.14 after losing $0.19 (-1.04%) today, significantly underperforming the S&P 500 (0.18%) ahead of tomorrow's Presidents' Day market holiday. Trading $0.14 higher after the open, the market was unable to hold its gains as the bears took control ending the day below its opening price. Closing within the previous day's range, prices failed to decisively move beyond the prior day's trading range in a lackluster session.
Daily Candlestick Chart (GPS as at Feb 14, 2020):
Friday's trading range has been $0.36 (1.97%), that's below the last trading month's daily average range of $0.53. Weekly volatility is also lower, being below the market's average weekly trading range. The longer-term, monthly volatility is currently slightly lower than usual for GPS. Prices continued to consolidate within a tight trading range between 17.84 and 18.50 where it has been caught now for the last three trading days.
One bearish candlestick pattern matches today's price action, the Bearish Hikkake Pattern.
Prices are trading close to the key technical support level at 17.99 (S1). Unable to break through the key technical resistance level at 18.39 (R1), the share closed below it after spiking up to 18.43 earlier during the day. The failure to close above the resistance could increase that levels significance going forward. After having been unable to move above 18.36 in the previous session, Gap ran into sellers again around the same price level today, failing to move higher than 18.43. The last time this happened on February 4th, GPS actually gained 4.94% on the following trading day.
The trend is clearly bullish, showing an intact uptrend in the short, medium and long-term.
Buying might accelerate should prices move above the nearby swing high at 18.50 where further buy stops could get activated. With prices trading close to this year's low at 17.02, downside momentum might speed up should the stock break out to new lows for the year.
Among the eight market conditions that our pattern recognition engine identified today, the statistics for the OHLC Patterns based market condition "Bearish Hikkake Pattern" stand out. While it is usually interpreted as bearish, it has actually shown to be bullish for Gap. Out of 150 times, GPS closed higher 50.00% 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 59.33% with an average market move of 0.75%.