On the 4-hour chart of
GPS
, price action has interfered with the 200 Exponential Moving Average a numerous amount of times. And, almost every time it has, a reversal and price swing has occurred.
This latest one happened after a price surge caused by a normal stochastic oscillator divergence, sending price action straight through linear resistance. Old resistance becomes new support; the foundation of the technicals I've used to price target the short exit.
Gap Inc. is in a heavy sell off, as it has been for months on end. In some ways, this recent surge may be seen as standard price oscillation or even a short squeeze. The technicals right now are supporting a continuation of this collapsing trend.
Entry Price: $19.24.
Stop Loss: $20.55 (Resistance formed by movement before a downward gap)
Target Profit: $16.00
Methods of Capturing Gains
*Note: There is an infinite number of ways to capture bearishly favored gains. Be careful with the GPS weekly options because they have low volume, open interest, and liquidity, and can result in extremely unfavorable execution and fill pricing.
GPS
, price action has interfered with the 200 Exponential Moving Average a numerous amount of times. And, almost every time it has, a reversal and price swing has occurred. This latest one happened after a price surge caused by a normal stochastic oscillator divergence, sending price action straight through linear resistance. Old resistance becomes new support; the foundation of the technicals I've used to price target the short exit.
Gap Inc. is in a heavy sell off, as it has been for months on end. In some ways, this recent surge may be seen as standard price oscillation or even a short squeeze. The technicals right now are supporting a continuation of this collapsing trend.
Entry Price: $19.24.
Stop Loss: $20.55 (Resistance formed by movement before a downward gap)
Target Profit: $16.00
Methods of Capturing Gains
- Short stock.
- Short call credit spread.
- Naked puts.
- Put strike biased straddle.
- Bearish strangle.
*Note: There is an infinite number of ways to capture bearishly favored gains. Be careful with the GPS weekly options because they have low volume, open interest, and liquidity, and can result in extremely unfavorable execution and fill pricing.
Trade closed manually:
I closed the trade because there were some bull flags forming on lower timeframes, and because the M240 or H4 chart had just hit and rejected the Ichimoku red cloud. I don't want open positions while price action sits in the cloud, so I closed the trade for a hefty 10% equity profit and jackpots on the options.
Trade closed: target reached