About seven weeks ago, Bottomline Technologies (EPAY) produced excellent quarterly earnings results when its top line edged Wall Street consensus estimates and its bottom line crushed them. Market participants were expecting 9 cents per share and management delivered a huge beat - to the tune of 18 cents. That doubling of expected quarterly profit excited traders and EPAY was higher by nearly 17% at its high the next day. EPAY's average daily volume is currently 400,000 shares, but the day after earnings, volume soared to 3.5 million shares, its highest volume day since 1999. So the technical question becomes, "can EPAY hold the top of gap support created by that high volume earnings-related day?" Here's the visual:
I enjoy trading gaps as they help to define risk. In this case, EPAY resides almost squarely on key gap support. In addition, its RSI has fallen from overbought territory in early September at 70 to a much more palatable level close to 40. I'd look for renewed strength from this area.