Gap Inc (NYSE: GPS)

The Gap, Inc. operates as an apparel retail company worldwide. The company offers apparel, accessories, and personal care products for men, women, and children under the Old Navy, Gap, Banana Republic, Athleta, Intermix, and Hill City brands.

Take a look at the 1-year chart of The Gap (NYSE: GPS) with the added notations:

GPS has formed a major level of support at $24 (green) during the past six months. The stock just hit that level again and should get a bounce. However, if the $24 support level were to break, lower prices should be expected for GPS.

The Tale of the Tape: GPS has key support at $24. A trader could enter a long position at or around $24 with a stop placed under the level. If the stock were to break below the support, a short position could be entered instead.

Before making any trading decision, decide which side of the trade you believe gives you the highest probability of success. Do you prefer the short side of the market, long side, or do you want to be in the market at all? If you haven’t thought about it, review the overall indices themselves. For example, take a look at the S&P 500. Is it trending higher or lower? Has it recently broken through a key resistance or support level? Making these decisions ahead of time will help you decide which side of the trade you believe gives you the best opportunities.

No matter what your strategy or when you decide to enter, always remember to use protective stops and you’ll be around for the next trade. Capital preservation is always key!

Good luck!
Christian Tharp, CMT