Concept:
When a stock creates a big Gap and moves up, it does pull back at a later stage to fill that Gap. Once the Gap is filled, the stock resumes the upmove.
Case Study: Alibaba Holding
I covered Alibaba stock in Dec 2016 and early Jan 2017
Alibaba stock is at very attractive support levels:
1. 200 dma which it has held in the past
2. Gap Filled Support pic.twitter.com/ADBO2pUlJU— Deepak Singh (@smarket) December 20, 2016
The stock remained at the level for quite some time. This was the state of the chart on January 02 2017. I covered the same here
Here’s what BABA stock has done since then:
Source: Chartalert.com
BABA stock is up 100%. Gap-up is a Value Recognition and when stocks fill the gap – it’s seen as Value buying Opportunity
Disclaimer – The state of the market notes is Deepak’s perspective on the market. The column is purely for educational purpose. Nothing contained herein is a solicitation to trade or a recommendation of a specific trade. By reading this publication you agree to make no trade relying in whole or in part on the comments of the writers