AMAT still stuck within tight trading range
Applied Materials Inc. (AMAT) Technical Analysis Report for Jun 01, 2020 | by Techniquant Editorial Team
AMAT finished Monday at 55.69 edging lower $0.49 (-0.87%) on low volume, significantly underperforming the Nasdaq 100 (0.45%). Trading up to $0.44 lower after the open, the market managed to reverse during the session as bulls took control ending the day above 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 (AMAT as at Jun 01, 2020):
Monday's trading range has been $1.27 (2.28%), that's below the last trading month's daily average range of $2.09. Weekly volatility is also lower, being below the market's average weekly trading range. The longer-term, monthly volatility is currently slightly higher than usual for AMAT. Prices continued to consolidate within a tight trading range between 53.32 and 56.71 where it has been caught now for the whole last trading week.
Three candlestick patterns are matching today's price action, the Bearish Hikkake Pattern and the Northern Doji which are both known as bearish patterns and one neutral pattern, the Doji. The last time a Northern Doji showed up on March 25th, AMAT actually gained 9.99% on the following trading day.
Prices are trading close to the key technical resistance level at 56.71 (R1). Applied Materials was sold again around 56.46 after having seen highs at 56.38, 56.68 and 56.44 in the last three trading sessions. Obviously there is something going on at that level.
Although still in a long-term downtrend, the short and medium-term trends both turned bullish already.
Buying could accelerate should prices move above the close-by swing high at 56.68 where further buy stops might get triggered. Selling could speed up should prices move below the nearby swing low at 53.32 where further sell stops might get activated. Further buying could move prices higher should the market test May's close-by high at 58.16.
Among the nine market conditions that our pattern recognition engine identified today, the statistics for the OHLC Patterns based market condition "Northern Doji" stand out. Though it is usually interpreted as bearish, it has actually shown to be bullish for Applied Materials. Out of 70 times, AMAT closed higher 61.43% 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 67.14% with an average market move of 1.03%.