Playing the ABC Gap Fill for Swing Trading Entry
Take a look at Michael Kors' stock for a good example of an ABC gap fill pattern.
A sample we will use today is the fast-growth stock of the leading luxury retailer Michael Kors (NYSE:KORS). Several days in advance, we suggested watching for a gap fill at $57 on this stock before entering a long trade. We also spotted what looked like a classic C wave pattern coming down from a B wave interim top.
Sure enough, it took several days but the stock worked its way down to $57 and hit the gap on the nose on February 26. It immediately reversed to end the day $2.25 higher, or with about 4-5% swing gains on this pattern. The chart below shows a 1, 2, 3, and 4 pattern with ABC making up the 4 pattern on KORS stock.
Click to enlarge
Editor's Note: David Banister is the chief investment strategist and co-founder of ActiveTradingPartners.com, a small-cap portfolio and market advisory service.
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