Mind The Gap To Enter Norwegian Cruise Line Stock

Norwegian Cruise Line Holdings Ltd NCLH opened up 6.1% higher Monday morning leaving a gap below. Some traders and investors may worry they missed the boat on Norwegian Cruise Line stock, but the ideal entry would be to wait for it to fill the gap.

What Is A Gap: A gap represents an unfilled area or entity on a chart where there is no recent price history. A gap happens when a stock opens above or below its trading range from the previous day. Sometimes the stock price will rise or fall immediately to fill the gap after the market opens but not always. Some research suggests that gaps left behind get filled nine out of 10 times.

The Norwegian Cruise Line Chart: Norwegian Cruise Line stock broke out of the descending channel it had been trading in since March 1 on Thursday, pushing it above the eight-day exponential moving average (EMA) but pinning it under the 21-day EMA. On Monday, Norwegian Cruise Line stock jumped up over the 21 EMA and above a support/resistance level of $28.97, opening at $29.40. This jump left a gap below on the daily chart which leaves traders an ideal entry point to watch for.

As the saying goes, gap ups are for selling and gap downs are for buying.

There is a high likelihood Norwegian Cruise Line stock will fall back into the gap it left behind between $28 and $28.97 within the next few trading sessions, which would offer a good entry into a long position. There is also a possibility that the stock could retrace to the top sloping line of the descending channel and test it as resistance before making another move upwards.

Norwegian Cruise Line also has a bullish thesis as a reopening stock. With its ships docked since March 2020, Norwegian Cruise Line stock is trading down 45% from its pre-pandemic prices. That could soon change, however, as on Monday, the cruise line released its plan to set sail on July 4 with a requirement all crew and passengers are fully vaccinated. It is awaiting permission from the Centers for Disease Control and Prevention.

NCLH Price Action: Shares of Norwegian Cruise Line closed up 7.18% at $29.71.