Ride-hailing company Uber Technologies (UBER) gapped higher Tuesday on the heels of a better-than-anticipated earnings report. For technical analysts a gap is a price void and typically comes from a demand surprise (gaps in commodities typically come from supply surprises). For train travelers a "gap" is something they need to watch in between train or subway cars.
Let's check out the charts of UBER.
In the daily bar chart of UBER, below, we can see that the shares were moving up in advance of Tuesday's earnings beat. Prices are not trading at the high of the day at this point in time telling me there is some profit-taking going on. Where UBER closes in the range Tuesday is important information. Prices are trading above the now-rising 50-day moving average line.
On-Balance-Volume (OBV) line shows improvement from early July telling us there was more aggressive buying ahead of Uber's earnings report. The Moving Average Convergence Divergence (MACD) oscillator has crossed above the zero line for an outright buy signal.
In the weekly Japanese candlestick chart of UBER, below, we can see some lower shadows in the past three months as prices show some bottoming price action. UBER trading below the declining 40-week moving average line so math tells us we are in a longer-term downward trend.
The weekly OBV line shows a low in June and some improvement in July. The MACD oscillator has crossed to the upside for a cover shorts buy signal.
In this daily Point and Figure chart of UBER, below, we can see a price objective in the $44 area.
In this weekly Point and Figure chart of UBER, below, we can see the same $44 price target as the daily chart above.
Bottom-line strategy: In strong market environments an upside price gap has less likelihood of a pullback or a partial gap fill. In a weak market environment the odds increase for a gap to be filled or partially filled. UBER may see a $31 to $24 trading range in the weeks ahead. Stay nimble.
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