February 12 Chart of the Day - Expedia

Precision oriented price action technical analysis by far provides the best edges and most setups for traders across the markets so that's what we use for the basis of our reviews.

Expedia (EXPE) announced a CEO change late Thursday while beating earnings estimates for the fourth quarter. Expedia stock gapped down from $160.05 to the $126 area Friday after hitting a 52-week high Thursday.

The online travel company's earnings release showed Q4 bookings came in slightly below Wall Street estimates. Outlook for the current first quarter also "suggests slower bookings growth to start 2024," according to IBD published reports.

After learning about the huge gap down we wanted to review the chart from a price action technical analysis perspective.

Starting with the monthly chart one of the first things we noticed after segmenting the chart with support and resistance levels was a change control zone roughly between $115 to $125 (gray shaded rectangle).

Change control zones are one of the five price action tools we teach when charting anything.  By definition, they are an area that represents where neither the bulls nor bears are in charge.  Price can slash though the zone with seemingly reckless abandon, price can respect the top or bottom from outside it or within it.  Or, price can trade aimlessly sideways within it.  When price breaks away from the zone it can often get drawn back to it like a magnet. And in this case we see all of the above are true.

So regardless of the "news oriented" reasons it didn't come as a huge surprise to us to see price gap down to the level where it did on Friday.  

Taking a look at the weekly chart allows us to zoom in and see how price moved and bounced precisely on a 50% bull Fibonacci retracement.  This indicates to us that the drop could be part of a normal type of pull back.  The manner in which it dropped being not so typical however.

We can also see that exactly at the point where the drop started was the test of a trend line established almost two years ago and tested and respected twice in late 2023.

Lastly, on the daily chart we can see how dramatic the Gap down opening price was on Friday and that price has already bounced up from that 50% retracement level and away from the change control zone...

ChartPros provides the exact methodology in its price action technical analysis courses to create charts like this with the most precise and accurate levels from which investors and traders can formulate their respective trade plans.

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