FireEye (FEYE) gapped to the upside today. Looking back over the past twelve months at a simple bar chart (below), we can see a number of gaps -- some to the upside and many to the downside. Many of these gaps are what are called "common gaps," in that they appear in trading ranges. Breakaway, runaway and exhaustion gaps come at the beginning of a new trend (up or down) or the middle of an existing trend.
The key question right now is whether today's gap will have follow-through buying or whether prices will stall and "dribble" lower. Let's examine our daily and weekly charts to see what other signals we might glean from the price action.
In this daily chart of FEYE, above, we can see that FEYE gaped today above the declining 200-day moving average line. For the past five weeks or so, FEYE has been above the rising 50-day moving average line.
The daily On-Balance-Volume (OBV) line declined from July to February, with a "retest" in March. The line moves upward in the back half of March as prices rallied. A new high for the OBV line, should it occur, will be a vote for further gains. In the lower panel is the 12-day momentum study, which shows a bullish divergence in February and March -- as prices made lower lows the momentum study made higher lows.
In this weekly chart of FEYE, above, we can see how prices have continued to drift lower since early 2016. Prices have hugged the underside of the declining 40-week moving average line until today's gap (not shown). The weekly OBV line has been mostly neutral since early 2016, but we might say that it has turned up a little in recent weeks. The Moving Average Convergence Divergence (MACD) oscillator is still below the zero line, but it is edging closer to a crossover and buy signal.
This Point and Figure chart, above, does not show any price gaps by design. The recent rally just goes straight up from $11.00 to $14.50. This move generates a possible upside price target in the $22 area.
Bottom line: FEYE did not show a lot of clear bullish signals ahead of today's upside gap. This gap could be the start of a rally, but without some accumulation before the gap, I am reluctant to get too bullish.
While FEYE might not decline to fill today's gap, it is probably going to trade sideways for a while rather than launch higher. A $13.50-to-$15.50 trading range with a rising OBV line would give me more confidence to look for higher prices in the months ahead.