ADP finds buyers at key support level
Automatic Data Processing Inc. (ADP) Technical Analysis Report for Jul 31, 2020 | by Techniquant Editorial Team
ADP ended the month -10.73% lower at 132.91 after gaining $0.02 (0.02%) today, strongly underperforming the Nasdaq 100 (1.78%). Closing within the previous day's range, prices missed to decisively move beyond the prior day's trading range.
Daily Candlestick Chart (ADP as at Jul 31, 2020):
Friday's trading range has been $4.67 (3.49%), that's far above the last trading month's daily average range of $3.09. Weekly volatility is also higher, being way above the market's average weekly trading range. The longer-term, monthly volatility is currently higher than usual for ADP.
Two candlestick patterns are matching today's price action, the Takuri Line which is known as bullish pattern and one bearish pattern, the Bearish Spinning Top.
After trading down to 129.86 earlier during the day, the share bounced off the key technical support level at 130.64 (S1). The failure to close below the support might increase that levels importance as support going forward. When prices bounced off a significant support level the last time on Wednesday, ADP actually lost -3.08% on the following trading day. Prices are trading close to the key technical resistance level at 135.38 (R1). After having been unable to move above 134.74 in the previous session, the stock ran into sellers again around the same price level today, missing to move higher than 134.53.
With another close below the lower Bollinger Band, prices are confirming their strong downward momentum in the short-term. A rally back into the Bollinger Band on the next trading day although could signal a potential change in momentum that might lead to a correction back up towards the center of the Bollinger Bands at 145.10.
The trend is clearly bearish, showing an intact downtrend in the short, medium and long-term.
Among the five market conditions that our pattern recognition engine identified today, the statistics for the Technical Indicators based market condition "Close below the lower Bollinger Band" stand out. While it is usually interpreted as bearish, it has actually shown to be bullish for Automatic Data. Out of 118 times, ADP closed higher 62.71% 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 59.32% with an average market move of 0.79%.