SKY LSE:SKY gapped up significantly last week. Previously this stock was just travelling sideways and was hovering around the £10 figure, then unexpectedly price jumped up which may be down to a news announcement. As technical traders we believe that the news is factored into price and regardless of what caused the gap, we have to figure out how to trade this move.
After a gap up we don't want to jump hastily into a trade, we want the market to confirm what the next move will be. Often times we see the gap get filled so the best option is to wait for the market to pull back and await a breakout of the high. Price appears to be pulling back now and if price does not go lower and instead decides to break above the resistance level drawn then we can start to look for buying opportunities.
At the moment price is above the 50 & 200 moving averages and there is still potential for growth. This is one to keep on the watchlist and if a breakout occurs then we will be ready to take a trade.
Any questions or comments, do not hesitate to leave them below.