AEP stuck within tight trading range
American Electric Power Company Inc. (AEP) Technical Analysis Report for Sep 16, 2020 | by Techniquant Editorial Team
AEP finished Wednesday at 80.46 gaining $0.46 (0.57%), strongly outperforming the S&P 500 (-0.46%). Today's close at 80.46 marks the highest recorded closing price since August 24th. 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 (AEP as at Sep 16, 2020):
Wednesday's trading range has been $1.37 (1.72%), that's below the last trading month's daily average range of $1.71. Weekly volatility is also lower, being slightly below the market's average weekly trading range. The longer-term, monthly volatility is currently lower than usual for AEP. Prices continued to consolidate within a tight trading range between 79.21 and 81.34 where it has been caught now for the last three trading days.
During the whole day, prices traded within the previous day's range, unable to trade above the prior day's high or below the previous day's low forming an Inside Bar.
Prices are trading close to the key technical support level at 79.32 (S1). Unable to break through the key technical resistance level at 80.91 (R1), the stock closed below it after spiking up to 80.98 earlier during the day. The failure to close above the resistance could increase that levels importance going forward. After having been unable to move lower than 79.39 in the prior session, American Electric found buyers again around the same price level today at 79.61.
Although the market 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 81.34 where further buy stops might get activated.
Among the three market conditions that our pattern recognition engine identified today, the statistics for the Support/Resistance based market condition "Bounced off Technical Resistance R1" stand out. Though it is usually interpreted as bearish, it has actually shown to be bullish for American Electric. Out of 430 times, AEP closed higher 52.33% 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 61.40% with an average market move of 0.38%.