Pardo me for butting in - seems to be a bit of discussion about that potential for gap closure - this is my 1st post on CCC although I've had it for a month or two now. I think its worth keeping a bit of perspective about gaps:
1. While the vast majority of gaps do close, not all do - see example in the chart below of the larger gap created in July which didnt close.
2. A gap is a technical anomaly which results in a technical market force and is due to technical trading in the market - not fundamentals.
3. Long term it is fundmanetals that drive the price of a stock, not any tehnical anomaly such as a gap. Technical anomalies can result in temporary forces affecting an asset price short term, but such short term forces are always overridden by fundamentals in th long term.
3. The results? If a gap like the current one does close it will result in a temporary drop in the SP to do so, but the emphasis is on temporary. This means it is a temporary opportunity to buy the stock cheaper, because the fundamentals of the stock will prevail and in this case that means will eventually (or soon) head north.
Long term investors therefore do not need to be concerned with temporary anomalies such as gaps, other than they are 2nd opportunities to buy a sound stock for a good long term return.
Cheers, Sharks.
PS: I note that support on this retrace is largely around the 50% retrace from the last peak, although it did test the 61.8% fib level. This largely repeats the pattern of the previous large move up where it only retraced to the 50% fib level. Other technicals (OBV, ADX,EMAs) all looking positive.
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