AA finds buyers around 8.02 for the third day in a row
Alcoa Corporation (AA) Technical Analysis Report for May 22, 2020 | by Techniquant Editorial Team
Moving lower for the 2nd day in a row, AA ended the week 23.27% higher at 8.21 after losing $0.07 (-0.85%) today on low volume, notably underperforming the S&P 500 (0.24%) ahead of tomorrow's Memorial Day market holiday. Closing within the previous day's range, prices missed to decisively move beyond the prior day's trading range in a lackluster session.
Daily Candlestick Chart (AA as at May 22, 2020):
Friday's trading range has been $0.35 (4.22%), that's far below the last trading month's daily average range of $0.54. Weekly volatility is also lower, being slightly below the market's average weekly trading range. The longer-term, monthly volatility is currently slightly higher than usual for AA. Prices continued to consolidate within a tight trading range between 8.02 and 8.44 where it has been caught now for the last three trading days.
Despite a strong opening the share closed below the previous day's open and close, forming a bearish Engulfing Candle. The last time this candlestick pattern showed up on April 23rd, AA lost -1.92% on the following trading day.
Prices are trading close to the key technical support level at 7.96 (S1). Alcoa found buyers again today around 8.02 for the third trading day in a row after having found demand at 8.03 in the prior session and at 8.06 two days ago.
Though still in a long-term downtrend, the short and medium-term trends both turned bullish already.
Buying might speed up should prices move above the close-by swing high at 8.44 where further buy stops could get triggered. Further buying might move prices higher should the market test April's nearby high at 8.90.
Among the seven market conditions that our pattern recognition engine identified today, the statistics for the Support/Resistance based market condition "High close to previous two Highs" stand out. Although it is usually interpreted as bearish, it has actually shown to be bullish for Alcoa. Out of 98 times, AA closed higher 57.14% of the time on the next trading day after the market condition occurred. The optimal exit for swing trading this condition on the long side has been after six trading days, showing a win rate of 56.12% with an average market move of 0.75%.