AMP Breakaway Gap

Friday's trading room... identified a Potential Breakaway Gap on Australia's AMP stock. The room is buying Puts.

• Breakaway Gaps source: Stockcharts.com
  
• Breakaway gaps are the exciting ones. They occur when the price action is breaking out of their trading range or congestion area. To understand gaps, one has to understand the nature of congestion areas in the market. A congestion area is just a price range in which the market has traded for some period of time, usually a few weeks or so. The area near the top of the congestion area is usually resistance when approached from below. Likewise, the area near the bottom of the congestion area is support when approached from above. To break out of these areas requires market enthusiasm and, either, many more buyers than sellers for upside breakouts or more sellers than buyers for downside breakouts.

I personally am choosing to stay out of this trade because I'm not confident that AMP has broken down through resistance yet. The resistance line is not definite (to me) - it's quite wide, so IMO could rebound a bit... as it's doing today. I will re-assess this trade during this week. If it breaks down more with good volume, them I may enter with bought puts.

Note to self: this post is created with ScribeFire... first one like this... just trying it out.