ADI runs into sellers around 119.37 for the third day in a row
Analog Devices Inc. (ADI) Technical Analysis Report for Feb 14, 2020 | by Techniquant Editorial Team
ADI finished the week 4.79% higher at 117.65 after losing $1.23 (-1.03%) today on low volume, significantly underperforming the Nasdaq 100 (0.29%) ahead of tomorrow's Presidents' Day market holiday. Closing within the prior day's range, prices failed to decisively move beyond the previous day's trading range.
Daily Candlestick Chart (ADI as at Feb 14, 2020):
Friday's trading range has been $2.66 (2.23%), that's slightly above the last trading month's daily average range of $2.40. Weekly volatility is also higher, being above the market's average weekly trading range. The longer-term, monthly volatility is currently higher than usual for ADI. Prices continued to consolidate within a tight trading range between 116.71 and 119.37 where it has been caught now for the last three trading days.
In a volatile session, prices traded above the prior day's high as well as below the previous day's low, forming a bearish Outside Bar. The last time this happened on January 24th, ADI lost -4.56% on the following trading day. Even with a strong opening the share closed below the prior day's open and close, forming a bearish Engulfing Candle. Additionally, one bearish candlestick pattern matches today's price action, the Black Candle.
After trading down to 116.71 earlier during the day, Analog Devices bounced off the key technical support level at 116.86 (S1). The failure to close below the support might increase that levels significance as support going forward. Prices are trading close to the key technical resistance level at 119.53 (R1). The market ran into sellers again today around 119.37 for the third trading day in a row after having found sellers at 119.04 in the previous session and at 119.05 two days ago.
The trend is clearly bullish, showing an intact uptrend in the short, medium and long-term.
With prices trading close to this year's high at 122.20, upside momentum could accelerate should the stock be able to break out to new highs for the year.
Among the seven market conditions that our pattern recognition engine identified today, the statistics for the OHLC Patterns based market condition "Bearish Engulfing Candle" stand out. While it is usually interpreted as bearish, it has actually shown to be bullish for Analog Devices. Out of 80 times, ADI closed higher 62.50% 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 58.75% with an average market move of 0.81%.