Timothy Smith
3 min read
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Gap shares plunged Friday after the apparel retailer cautioned that tariffs will weigh on profit this year, overshadowing quarterly results that topped Wall Street expectations.
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The stock had previously run into selling pressure near prominent peaks that formed on the chart in March and June last year, indicating that some larger market participants locked in profits ahead of the retailer’s quarterly results.
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Investors should watch crucial support levels on Gap's chart around $22 and $19, while also monitoring a major overhead area near $29.
Gap Inc. (GAP) shares plunged Friday after the apparel retailer cautioned that tariffs will weigh on profit this year, overshadowing quarterly results that topped Wall Street expectations.
The company behind brands including Old Navy, Banana Republic, Athletica and its namesake label said baseline import duties could dent operating income by between $100 million and $150 million this year.
Leading into the company’s earnings report, Gap shares had rallied 65% from their early-April low and gained 18% since the start of the year, boosted by the retailer’s recent efforts to reinvigorate its brands and drive sales growth. The stock was down 19% in afternoon trading Friday at around $22.50
Below, let’s break down the technicals on Gap’s chart and identify price levels that investors will likely be watching.
Since bottoming out in early April, Gap shares have trended sharply higher, reclaiming both the 50- and 200-day moving averages along the way.
More recently, however, the stock ran into selling pressure near prominent peaks that formed on the chart in March and June last year. Interestingly, the drop occurred on increasing trading volume, indicating that some larger market participants locked in profits ahead of the retailer’s quarterly results.
Selling accelerated Friday, pushing the relative strength index (RSI) below overbought territory for the first time since mid May.
Let’s identify support levels on Gap’s chart worth watching and point out a major overhead area to monitor during future recovery efforts.
Coming into today's session, $25 was a key support level to monitor, but that was quickly breached and bulls haven't been able to defend it.
The next level to watch is around $22. This area provides a confluence of support near the key moving averages and a horizontal line that connects multiple peaks and troughs on the chart extending back to December 2023.
A deeper correction in the stock could bring lower support at $19 into play. Investors may seek to accumulate shares at this location near a trendline that links a series of corresponding trading activity on the chart between January last year and April this year.
