AAOI breaks above 200-day moving average for the first time since June 8th
Applied Optoelectronics Inc. (AAOI) Technical Analysis Report for Jun 30, 2020 | by Techniquant Editorial Team
Moving higher for the 2nd day in a row, AAOI finished the month 23.1% higher at 10.87 after surging $1.46 (15.52%) today on high volume, significantly outperforming the S&P 500 (1.54%). This is the biggest single-day gain in over five months. Today's close at 10.87 marks the highest recorded closing price since May 7th. The bulls were in full control today, moving the market higher throughout the whole session. Closing above Monday's high at 9.57, the share confirmed its breakout through the previous session high after trading up to $1.60 above it intraday.
Daily Candlestick Chart (AAOI as at Jun 30, 2020):
Tuesday's trading range has been $1.82 (19.47%), that's far above the last trading month's daily average range of $0.59. Weekly volatility is also higher, being way above the market's average weekly trading range. The longer-term, monthly volatility is currently slightly higher than usual for AAOI.
Despite a weak opening the stock managed to close above the prior day's open and close, forming a bullish Engulfing Candle. Additionally, two candlestick patterns are matching today's price action, the Bullish Belt-hold and the White Candle which are both known as bullish patterns.
Applied Optoelectronics managed to close above the 200-day moving average at 10.19 for the first time since June 8th. When this moving average was crossed above the last time on June 8th, AAOI actually lost -5.27% on the following trading day.
Crossing above the upper Bollinger Band for the first time since June 8th, prices have shown unusually strong upward momentum in the short-term. This could either indicate a potential buying climax after which prices might head back down towards the mean of the Bollinger Bands at 9.61 or signal the beginning of a strong momentum breakout leading to even higher prices.
While still in a long-term downtrend, the short and medium-term trends both turned bullish already.
Among the 17 market conditions that our pattern recognition engine identified today, the statistics for the Support/Resistance based market condition "Bullish Break through SMA 200" stand out. Although it is usually interpreted as bullish, it has actually shown to be bearish for Applied Optoelectronics. Out of 18 times, AAOI closed lower 66.67% 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 61.11% with an average market move of -2.27%.