GPS finds buyers at key support level
Gap Inc. (GPS) Technical Analysis Report for May 22, 2020 | by Techniquant Editorial Team
Moving higher for the 2nd day in a row, GPS finished the week 8.03% higher at 8.21 after edging higher $0.02 (0.24%) today, performing in line with the S&P 500 (0.24%) ahead of tomorrow's Memorial Day market holiday. Today's close at 8.21 marks the highest recorded closing price since April 29th. Closing within the previous day's range, prices missed to decisively move beyond the prior day's trading range.
Daily Candlestick Chart (GPS as at May 22, 2020):
Friday's trading range has been $0.65 (7.92%), that's slightly below the last trading month's daily average range of $0.70. Weekly volatility is also lower, being slightly below the market's average weekly trading range. The longer-term, monthly volatility is currently slightly lower than usual for GPS.
Six candlestick patterns are matching today's price action, the Bearish Doji Star, the Gravestone Doji and the Northern Doji which are known as bearish patterns and three neutral patterns, the Doji, the Long-Legged Doji and the Rickshaw-Man. The last time a Rickshaw-Man showed up on March 13th, GPS lost -22.85% on the following trading day.
After trading down to 7.95 earlier during the day, Gap bounced off the key technical support level at 8.01 (S1). The failure to close below the support might increase that levels significance as support going forward.
While the market is experiencing a short-term uptrend, this could just be a correction, as both the medium and long-term trends are still bearish.
Further buying might move prices higher should the market test April's close-by high at 9.39.
Among the eight market conditions that our pattern recognition engine identified today, the statistics for the OHLC Patterns based market condition "Bearish Doji Star" stand out. Although it is usually interpreted as bearish, it has actually shown to be bullish for Gap. Out of 8 times, GPS closed higher 62.50% 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 100.00% with an average market move of 5.07%.