ADS finds buyers at key support level
Alliance Data Systems Corporation (ADS) Technical Analysis Report for Jul 12, 2019 | by Techniquant Editorial Team
Moving higher for the 2nd day in a row, ADS finished the week 0.91% higher at 149.60 after gaining $1.63 (1.1%) today, outperforming the S&P 500 (0.46%). Today's close at 149.60 marks the highest recorded closing price since May 8th. Trading up to $1.68 lower after the open, the market managed to reverse during the session as bulls took control ending the day above its opening price. Closing above Thursday's high at 149.46, the share confirmed its breakout through the previous session high after trading up to $0.52 above it intraday.
Daily Candlestick Chart (ADS as at Jul 12, 2019):
Friday's trading range has been $3.26 (2.2%), that's slightly above the last trading month's daily average range of $2.73. Things look different on the weekly timeframe, where the market's trading range of the last week has been below the market's average weekly trading range. The longer-term, monthly volatility is currently slightly higher than usual for ADS. Prices continued to consolidate within a tight trading range between 145.51 and 150.33 where it has been caught now for the whole last trading week.
In a volatile session, prices traded above the prior day's high as well as below the previous day's low, forming a bullish Outside Bar. The last time this happened on June 27th, ADS gained 2.06% on the following trading day.
After trading down to 146.72 earlier during the day, the stock bounced off the key technical support level at 147.50 (S1). The failure to close below the support could increase that levels significance as support going forward. Alliance Data found buyers again today around 146.72 for the third trading day in a row after having found demand at 147.23 in the prior session and at 147.11 two days ago.
Although ADS is experiencing a short-term uptrend, this might just be a correction, as both the medium and long-term trends are still bearish.
Buying could speed up should prices move above the nearby swing high at 150.33 where further buy stops might get activated.
Among the 10 market conditions that our pattern recognition engine identified today, the statistics for the OHLC Patterns based market condition "Bullish Outside Bar" stand out. Its common bullish interpretation has been confirmed for Alliance Data. Out of 118 times, ADS 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 66.10% with an average market move of 1.33%.