ADS unable to break through key resistance level
Alliance Data Systems Corporation (ADS) Technical Analysis Report for Jun 30, 2020 | by Techniquant Editorial Team
ADS finished the month -2.61% lower at 45.12 after edging lower $0.59 (-1.29%) today, strongly underperforming the S&P 500 (1.54%). Trading $1.06 higher after the open, the stock was unable to hold its gains as the bears took control ending the day below its opening price. Closing within the prior day's range, prices missed to decisively move beyond the previous day's trading range in a lackluster session.
Daily Candlestick Chart (ADS as at Jun 30, 2020):
Tuesday's trading range has been $2.07 (4.56%), that's far below the last trading month's daily average range of $3.59. Weekly volatility is also lower, being below the market's average weekly trading range. The longer-term, monthly volatility is currently slightly lower than usual for ADS.
Two candlestick patterns are matching today's price action, the Bearish Hikkake Pattern and the Bearish Spinning Top which are both known as bearish patterns. The last time a Bearish Hikkake Pattern showed up on May 18th, ADS lost -4.86% on the following trading day.
Unable to break through the key technical resistance level at 46.10 (R1), the share closed below it after spiking up to 46.47 earlier during the day. The failure to close above the resistance could increase that levels importance going forward.
Alliance Data shows weakness in the short-term (in accordance with its long-term downtrend) with only the medium-term trend still being bullish.
Buying might accelerate should prices move above the close-by swing high at 48.76 where further buy stops could get triggered. Selling might speed up should prices move below the nearby swing low at 42.42 where further sell stops could get activated.
Among the six market conditions that our pattern recognition engine identified today, the statistics for the OHLC Patterns based market condition "Bearish Spinning Top" stand out. Although it is usually interpreted as bearish, it has actually shown to be bullish for Alliance Data. Out of 230 times, ADS closed higher 52.61% 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 58.26% with an average market move of 0.79%.