Is the gap between $23 and $24 in OUST going to be filled? 09/05

To determine whether the gap between $23 and $24 in Ouster (OUST) stock is likely to be filled, let’s analyze the historical price data provided and the context of the gap, incorporating technical analysis principles and market sentiment where relevant.

Identifying the Gap

A price gap occurs when a stock’s price opens significantly higher or lower than the previous day’s close, leaving a range with no trading activity. Based on the provided data, we can identify a potential gap by examining day-to-day price movements, particularly around the $23–$24 range. The most likely gap in this range occurred between August 7, 2025 (Close: $23.10) and August 8, 2025 (Open: $29.44), where the stock gapped up significantly, skipping the $23.10–$29.44 range, which includes the $23–$24 zone.

• August 7, 2025: Close at $23.10, Low at $22.49.
• August 8, 2025: Open at $29.44, Low at $25.51, Close at $25.80.

This upward gap left a price range (approximately $23.10–$25.51) with no trading activity, as the low on August 8 did not drop below $25.51. The $23–$24 range falls within this gap, and the question is whether the stock price will return to this level to “fill” it, meaning trade back down to cover the untraded range.

Technical Analysis of the Gap

In technical analysis, gaps often attract attention because they can act as support/resistance zones or may be filled later as prices revert to the gapped range. Here’s the analysis:

1. Type of Gap:
   • This appears to be a breakaway gap, as it occurred during a period of strong upward momentum (OUST rose from $21.64 on July 1 to $35.05 by August 14). Breakaway gaps typically signal strong bullish sentiment, often driven by fundamental catalysts (e.g., Ouster’s Q2 earnings, DoD approval, or revenue growth news). These gaps are less likely to be filled in the short term compared to common or exhaustion gaps, as they reflect a shift in market perception.
   • The high volume on August 8 (7,390,900 shares, significantly above the 90-day average of ~2.92M) supports the idea of a breakaway gap, indicating strong buying pressure.
2. Current Price Context:
   • As of September 5, 2025, OUST closed at $27.38, below the 20-day moving average ($29.92) but above the 50-day moving average ($26.93). The stock is in a short-term pullback after peaking at $36.25 on August 18.
   • The $23–$24 range is approximately 12–16% below the current price, suggesting a significant downward move would be needed to fill the gap.
3. Support and Resistance:
   • The gap zone ($23.10–$25.51) may act as a support zone if the price declines, as gaps often attract buying interest from traders looking to capitalize on a pullback.
   • Recent support levels are visible around $26.53–$27.18 (recent lows on Sep 2–5). A break below these could push the price toward the gap zone, with additional support near $25.80 (Aug 8 close) and the 50-day MA ($26.93).
   • Resistance lies around $29.92 (20-day MA) and $30.86–$31.64 (recent highs), which the stock must reclaim to resume bullish momentum.
4. Momentum Indicators:
   • The short-term trend shows a negative slope over the last 5 days (Sep 3–Sep 5, close from $27.42 to $27.38), with a 4.03% gain over 30 days but a recent slowdown. This suggests consolidation or a potential deeper pullback.
   • The Relative Strength Index (RSI) cannot be calculated directly from the provided data, but the recent decline from $30.86 (Aug 28) to $27.38 (Sep 5) after a high of $36.25 indicates possible overbought conditions earlier, now cooling off. If RSI is near or below 50, it could signal room for a further decline toward the gap.

Sentiment and Fundamental Context

• Sentiment: Online discussions and analyst reports remain bullish on Ouster’s long-term prospects due to its strong Q2 2025 revenue growth (30% YoY, $145M 2025 forecast) and efficient cash management ($227M cash, low OPEX burn). However, short-term bearish flags are noted, with some traders targeting $24–$25 if support breaks, aligning with the gap zone.
• Fundamentals: Ouster’s leadership in non-ADAS lidar applications (robotics, smart infrastructure) and partnerships (e.g., DoD, Deere & Co.) reduce the likelihood of a sharp decline unless negative catalysts emerge (e.g., missed earnings, sector-wide sell-off). The absence of recent negative news suggests the gap was driven by positive developments, supporting the breakaway gap hypothesis.
• Market Conditions: The broader lidar sector faces challenges (e.g., Luminar’s negative margins), but Ouster’s outperformance reduces sector-wide drag. A general market correction could push OUST lower, but its fundamentals provide a buffer.

Likelihood of Gap Fill

• Short-Term (1–3 Months): The gap is unlikely to be filled soon unless a significant catalyst (e.g., market sell-off, disappointing Q3 earnings) drives the price below current support levels ($26.53–$27.18). The stock’s short-term consolidation and high volume suggest dip-buying interest, potentially holding prices above the gap. If support breaks, the $25.51–$23.10 zone could be tested, with $23–$24 likely acting as strong support due to gap psychology.
• Mid-Term (3–6 Months): If the bullish trend (254.66% over 90 days) resumes, the gap may remain unfilled, as breakaway gaps often persist in strong uptrends. However, a deeper correction (e.g., to the 50-day MA or lower) could fill the gap partially or fully, especially if volume spikes on a sell-off. The probability increases if OUST fails to reclaim $29.92 (20-day MA).
• Long-Term (6–12 Months): Given Ouster’s strong fundamentals and analyst targets ($35–$50), the stock is more likely to trend higher than revisit $23–$24. Breakaway gaps in growth stocks with solid fundamentals are less likely to fill in the long term unless the company’s outlook deteriorates significantly.

Conclusion

The gap between $23 and $24, part of the larger $23.10–$25.51 gap from August 7–8, is unlikely to be filled in the short term due to Ouster’s bullish fundamentals and current support levels ($26.53–$27.18). In the mid-term, a correction could push prices toward the gap if supports break, with $23–$24 likely acting as a strong support zone. In the long term, the gap is less likely to be filled given Ouster’s growth trajectory and analyst targets of $35–$50, unless a major negative catalyst emerges. Monitor for a break below $26.53 or failure to reclaim $29.92 as signals for potential gap-filling moves.