ADI breaks below key technical support level
Analog Devices Inc. (ADI) Technical Analysis Report for Jul 31, 2020 | by Techniquant Editorial Team
Moving lower for the 2nd day in a row, ADI finished the month -6.35% lower at 114.85 after losing $1.45 (-1.25%) today, notably underperforming the Nasdaq 100 (1.78%). Closing within the prior day's range, prices missed to decisively move beyond the previous day's trading range.
Daily Candlestick Chart (ADI as at Jul 31, 2020):
Friday's trading range has been $3.15 (2.7%), that's slightly above the last trading month's daily average range of $2.88. Things look different on the weekly timeframe, where the market's trading range of the last week has been slightly below the market's average weekly trading range. The longer-term, monthly volatility is currently slightly higher than usual for ADI.
One bearish candlestick pattern matches today's price action, the Black Candle.
Prices broke below the key technical support level at 115.57 (now R1), which is likely to act as resistance going forward. After having been unable to move above 116.56 in the prior session, the share ran into sellers again around the same price level today, missing to move higher than 116.53. The last time this happened on Tuesday, ADI actually gained 1.82% on the following trading day.
While the market 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 speed up should prices move above the nearby swing high at 117.76 where further buy stops might get triggered.
Among the five market conditions that our pattern recognition engine identified today, the statistics for the Support/Resistance based market condition "Price broke through Technical Support S1" stand out. Although it is usually interpreted as bearish, it has actually shown to be bullish for Analog Devices. Out of 238 times, ADI closed higher 58.40% 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 56.72% with an average market move of 0.95%.