AA closes above its opening price after recovering from early selling pressure
Alcoa Corporation (AA) Technical Analysis Report for Jul 31, 2020 | by Techniquant Editorial Team
AA finished the month 15.66% higher at 13.00 after losing $0.18 (-1.37%) today, significantly underperforming the S&P 500 (0.77%). Trading up to $0.44 lower after the open, the market managed to reverse during the session as bulls took control ending the day above its opening price. Closing within the previous day's range, prices missed to decisively move beyond the prior day's trading range.
Daily Candlestick Chart (AA as at Jul 31, 2020):
Friday's trading range has been $0.65 (5.03%), that's slightly below the last trading month's daily average range of $0.71. Weekly volatility is also lower, being 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 12.47 and 13.36 where it has been caught now for the whole last trading week.
During the whole day, prices traded within the previous day's range, unable to trade above the prior day's high or below the previous day's low forming an Inside Bar. Additionally, two candlestick patterns are matching today's price action, the Bullish Spinning Top which is known as bullish pattern and one bearish pattern, the Hanging Man. The last time a Hanging Man showed up on July 15th, AA actually gained 6.30% on the following trading day.
Prices are trading close to the key technical resistance level at 13.31 (R1). After having been unable to move lower than 12.47 in the prior session, the share found buyers again around the same price level today at 12.48.
Although the stock is currently in a short-term downtrend, this might just be a correction, as both the medium and long-term trends are still bullish.
Buying could accelerate should prices move above the nearby swing high at 13.36 where further buy stops might get triggered. Selling could speed up should prices move below the close-by swing low at 12.47 where further sell stops might get activated. As prices are trading close to July's high at 13.86, upside momentum could accelerate should Alcoa mark new highs for the month.
Among the six market conditions that our pattern recognition engine identified today, the statistics for the Price Action based market condition "Bullish Intraday Reversal" stand out. Though it is usually interpreted as bullish, it has actually shown to be bearish for Alcoa. Out of 425 times, AA closed lower 54.82% of the time on the next trading day after the market condition occurred. The optimal exit for swing trading this condition on the short side has been after 10 trading days, showing a win rate of 50.82% with an average market move of 0.02%.