Target Clings to Support, With Gap Looming Below

Target reported decent earnings this week, but not a lot of buyers showed up. Now traders may want to watch for a potential breakdown with the big-box retailer near a key price zone.

TGT gapped from $86 to $100 last August on signs that its big digital push had paid off. It followed that with another strong quarterly report on November 20.

Since then, however, things haven't been so hot. TGT peaked around $130 a week before Christmas. It then announced in mid-January that the key holiday-shopping season missed estimates. The shares gapped down, bounced feebly and then continued lower to a potentially important level around $105.

This zone could be crucial because it's near the 200-day simple moving average (SMA) and the price area shortly after the August gap.

The recent price action is also potentially bearish because TGT tried to rally after earnings three days ago, but hit resistance around the old $111 support area from January 31.

Relative strength has been poor over the course of 2020, with TGT trending lower even as the S&P 500 hit new highs in January and February. It also faces potential risk from the spread of coronavirus.

Still, there isn't confirmation yet. Traders shopping for downside in TGT may want to wait for a close below the 200-day SMA.