Swing traders should always track open gaps when looking for good entry levels for a momentum stock. The old adage that all gaps eventually get filled may not be 100 percent accurate, but it does give the swing trader an edge.
GPRO has been on fire of late. On Monday I noted to Trade Report member that the high volume doji candle that printed signaled that the stock was extended and ready for a pullback, and that’s exactly what has happened. So how do we play this?
As noted in the weekend video analysis of GPRO, there is an open gap in the $73-74 range that converges with both the 20 day moving average and the top of the most recent consolidation range. This is the level I will start looking to enter. If I get stopped out here, the next level would be at the pivot level before that around $50. As swing traders we are always looking of the strongest areas of support for entry.