Since May, shares of local online marketplace Groupon Inc (NASDAQ:GRPN) for the most part have been trading in an unusually tight range, given its more volatile character. This raises the odds of a better trending, or at least a more volatile, period in the not too distant future.
GRPN stock currently is littered with unfilled gaps where the stock either moved up or down following news events since February. This helps traders and active investors focus on well-defined price targets.
Before looking at the charts, there are two things to note about shares of Groupon: 1) For what it’s worth, I still think that this company is a potential acquisition target if for nothing other than still-abundant financing in a slow-growth world. 2) Traders should circle August 5 on the calendar as an important date for GRPN stock, for that is when Groupon is scheduled to report its latest financial results.
GRPN Stock Charts
GRPN stock has a ‘long’ history of leaving large up and down-gaps behind on its charts after earnings reports or other news events.
As any seasoned trader knows, many price gaps tend to fill over time, but certainly not all of them. After a volatile few months GRPN stock has now since early May had time to digest somewhat and looks to be ready to start filling one or the other remaining unfilled gaps on its chart.
Before looking at the daily chart, however, let us gain a smidgen of perspective from the multiyear weekly chart. Here we see that while GRPN stock undoubtedly remains in a well-defined downtrend since its 2013 highs and most certainly from its all-time highs in 2011, the stock has also failed to break significantly below its 2012 lows.
Furthermore, the stock is showing better signs of coiling up below the diagonal resistance line from 2013, which however is only important if and when the stock should overcome this line to the upside.
The daily chart at present is simply littered with unfilled gaps, which I marked with the blue boxes.
First, note that there are gaps both above and below the current price level of GRPN stock. Yes, this does smell of somewhat of a binary bet or outcome for this stock, at least in the near-term, but that is why this business of trading and active investing is all about timeframes.
For my part, while I am respectful that GRPN could certainly drop lower from here, a first trade setup is for the stock to fill its unfilled down-gap from June 9 — i.e. move higher from here.
This gap fills around the $3.50 mark, and if this takes hold, it would not take too much imagination for the stock to also move back up to its blue 100-day simple moving average, which has held as resistance since early May.
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