For over three years now Gap, Inc.
Since late 2015 Gap has struggled to come off its lows just like many of its retail peers. The retail space has been highly out of favor as Amazon
If a technical trader looks back over three years, they will find that the Gap has mostly been in a wide range between $17 and $30. Every attempt to come off lows and push through $30 has been met with swift and aggressive selling. The first time it tried to move above $30 it nearly sold off 50%. The next effort cost buyers almost 30%, and the last attempt sold off 15%.
But then something interesting happened. Rather than selloff back to lows, the Gap suddenly stopped at $25, and in less than one week was able to rebound back to $30 once again. This time a positive earnings report grabbed the attention of the discount investor and volume spiked to its highest level in years. This type of move will always grab the attention of the technical traders and long term investors.
Lastly, the technical trader will be looking for the potential return should they decide to enter into the name. If Gap can successfully clear that $30 area, there is little to stop the name until the $40s which puts the long term risk/reward in the favor of the bulls.