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Fan Yang

Gap Inc (GPS): Bullish Divergence on Top of a 10-Year Range

If you bought GAP in 2012, 2013, 2014 or 2015, most likely you are hurting, especially if you bought it in the latter years. But take a look at the weekly chart. Price has come down to a key pivot area that represents the resistance of a 10-year consolidation range. 

GPS Weekly Chart 11/24

(click to enlarge)

It might be hard to see on the weekly chart above, but there is a bullish divergence that formed between price and the RSI. In fact, we can see a bullish divergence in the daily chart as well. 

GPS Daily Chart 11/24

(click to enlarge)

Now, despite the bullish signals I referred to, there is still bearish momentum and a pattern of lower highs and lower lows. A bullish divergence could be a nice early signal IF it is combined with other factors for the bullish outlook, say fundamental ones. 

What say you? Is Gap at a price where we can expect at least a short to medium-term rally. The 30.70-31 area could be a limit for this bullish outlook for now, given that there is a falling trendline and a previous support area here. Can we expect another 12% rise in GAP over the holidays? 

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