GPS stuck within tight trading range
Gap Inc. (GPS) Technical Analysis Report for Sep 16, 2020 | by Techniquant Editorial Team
GPS ended Wednesday at 17.24 gaining $0.37 (2.19%), strongly outperforming the S&P 500 (-0.46%). Closing within the prior day's range, prices missed to decisively move beyond the previous day's trading range.
Daily Candlestick Chart (GPS as at Sep 16, 2020):
Wednesday's trading range has been $0.67 (3.92%), that's slightly below the last trading month's daily average range of $0.72. 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. Prices continued to consolidate within a tight trading range between 16.86 and 17.53 where it has been caught now for the last three trading days.
After moving lower in the prior session, Gap managed to close higher but below the previous day's open, forming a bullish Harami Candle. Additionally, two candlestick patterns are matching today's price action, the Bullish Spinning Top and the Tweezer Bottom which are both known as bullish patterns. The last time a Tweezer Bottom showed up on April 16th, GPS gained 9.44% on the following trading day.
After trading down to 16.86 earlier during the day, the share bounced off the key technical support level at 16.98 (S1). The failure to close below the support could increase that levels significance as support going forward. The market found buyers again today around 16.86 for the third trading day in a row after having found demand at 16.86 in the prior session and at 16.87 two days ago.
Though the stock is currently in a short-term downtrend, this might just be a correction, as both the medium and long-term trends are still bullish.
Buying could speed up should prices move above the nearby swing high at 18.00 where further buy stops might get triggered. Selling could accelerate should prices move below the close-by swing low at 16.55 where further sell stops might get activated.
Among the nine market conditions that our pattern recognition engine identified today, the statistics for the OHLC Patterns based market condition "Bullish Harami Candle" stand out. Its common bullish interpretation has been confirmed for Gap. Out of 52 times, GPS closed higher 63.46% 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 eight trading days, showing a win rate of 61.54% with an average market move of 0.49%.