What's next for IDEXX Laboratories (IDXX) ? How you view the gap made on Tuesday is pivotal. There are three kinds of price gaps or price voids that technical analysts consider important. Breakaway gaps, runaway or measuring gaps and exhaustion gaps.
In this daily chart of IDXX, above, we can see how IDXX consolidated around the $70 area until January. Prices turned higher with a run to $95 from $65, or a $30 gain. Prices are above the rising 50-day average line and the rising 200-day average. The On-Balance-Volume (OBV) line has moved up with the price action and confirms the strength in the market. Momentum is not diverging from the price action.
In this three-year weekly chart of IDXX, we can see prices are above the rising 40-week moving average line. The OBV line on this time frame is pointed up and confirms the price action. The Moving Average Convergence Divergence (MACD) oscillator is in a bullish mode.
Price gaps disappear when creating a point-and-figure chart. This chart is included because it calculates a $100 price target of IDXX. We could come up with a $140 price target by doubling the $70 consolidation zone, but that doesn't address the issue with the gap. If IDXX is extended with its rally to $110 and only has a $100 point-and-figure target, we might be vulnerable to a downside reaction. A down move could turn the gap into an exhaustion gap if it is filled quickly. Stay nimble.