ADS closes within previous day's range after lackluster session
Alliance Data Systems Corporation (ADS) Technical Analysis Report for Jul 31, 2020 | by Techniquant Editorial Team
Moving lower for the 2nd day in a row, ADS finished the month -1.68% lower at 44.36 after edging lower $0.14 (-0.31%) today, notably underperforming the S&P 500 (0.77%). Trading up to $1.75 lower after the open, Alliance Data managed to reverse during the session as bulls took control ending the day above its opening price. Closing within the previous day's range, prices missed to decisively move beyond the prior day's trading range in a lackluster session.
Daily Candlestick Chart (ADS as at Jul 31, 2020):
Friday's trading range has been $1.84 (4.15%), that's below the last trading month's daily average range of $2.31. Weekly volatility is also lower, being slightly below the market's average weekly trading range. The longer-term, monthly volatility is currently slightly lower than usual for ADS. Prices continued to consolidate within a tight trading range between 42.58 and 45.59 where it has been caught now for the whole last trading week.
Five candlestick patterns are matching today's price action, the Bullish Hikkake Pattern and the Dragonfly Doji which are both known as bullish patterns, two bearish patterns, the Hanging Man and the Northern Doji and one neutral pattern, the Doji. The last time a Doji showed up on July 14th, ADS gained 8.02% on the following trading day.
After trading as low as 42.58 during the day, the market found support at the 20-day moving average at 42.85. The stock was bought again around 42.58 after having seen lows at 42.96, 42.74 and 42.93 in the last three trading sessions. Obviously there is something going on at that level.
Though still in a long-term downtrend, the short and medium-term trends both turned bullish already.
Buying might speed up should prices move above the nearby swing high at 45.59 where further buy stops could get triggered. As prices are trading close to July's high at 47.39, upside momentum might accelerate should the share mark new highs for the month.
Among the 14 market conditions that our pattern recognition engine identified today, the statistics for the OHLC Patterns based market condition "Dragonfly Doji" stand out. Its common bullish interpretation has been confirmed for Alliance Data. Out of 7 times, ADS closed higher 85.71% 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 seven trading days, showing a win rate of 57.14% with an average market move of 0.39%.