AAP breaks back below 20-day moving average
Advance Auto Parts Inc W/I (AAP) Technical Analysis Report for Sep 16, 2020 | by Techniquant Editorial Team
Moving lower for the 2nd day in a row, AAP ended Wednesday at 154.64 losing $2.24 (-1.43%), underperforming the S&P 500 (-0.46%). The bears were in full control today, moving the market lower throughout the whole session. Closing below Tuesday's low at 156.51, the market confirmed its breakout through the previous session low after trading up to $2.21 below it intraday.
Daily Candlestick Chart (AAP as at Sep 16, 2020):
Wednesday's trading range has been $3.22 (2.05%), that's slightly below the last trading month's daily average range of $3.41. Weekly volatility is also lower, being below the market's average weekly trading range. The longer-term, monthly volatility is currently lower than usual for AAP.
Two candlestick patterns are matching today's price action, the Bullish Hikkake Pattern which is known as bullish pattern and one bearish pattern, the Black Candle.
Prices are trading close to the key technical support level at 153.96 (S1). Advance Auto closed back below the 20-day moving average at 155.82. When this moving average was crossed below the last time on September 3rd, AAP lost -0.92% on the following trading day.
Though the share is currently in a short-term downtrend, this might just be a correction, as both the medium and long-term trends are still bullish.
Selling could speed up should prices move below the nearby swing low at 153.08 where further sell stops might get activated. As prices are trading close to September's high at 159.56, upside momentum could accelerate should the stock mark new highs for the month. Further selling might move prices lower should the market test August's close-by low at 149.71.
Among the nine market conditions that our pattern recognition engine identified today, the statistics for the Price Action based market condition "Decisive Down Move" stand out. While it is usually interpreted as bearish, it has actually shown to be bullish for Advance Auto. Out of 295 times, AAP closed higher 57.63% 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 10 trading days, showing a win rate of 53.90% with an average market move of 0.73%.