AZO runs into sellers around 1251.26 for the third day in a row
AutoZone Inc. (AZO) Technical Analysis Report for Sep 16, 2020 | by Techniquant Editorial Team
AZO ended Wednesday at 1229.23 losing $13.72 (-1.1%), underperforming the S&P 500 (-0.46%). The bears were in full control today, moving the market lower throughout the whole session. Closing below Tuesday's low at 1239.90, the market confirmed its breakout through the prior session low after trading up to $13.99 below it intraday.
Daily Candlestick Chart (AZO as at Sep 16, 2020):
Wednesday's trading range has been $25.35 (2.03%), that's slightly above the last trading month's daily average range of $24.07. Things look different on the weekly timeframe, where the market's trading range of the last week has been slightly below the market's average weekly trading range. The longer-term, monthly volatility is currently slightly higher than usual for AZO.
Despite a strong opening the stock closed below the previous day's open and close, forming a bearish Engulfing Candle. The last time this candlestick pattern showed up on September 10th, AZO actually gained 1.51% on the following trading day. Additionally, two candlestick patterns are matching today's price action, the Bullish Hikkake Pattern which is known as bullish pattern and one bearish pattern, the Black Candle.
After trading down to 1225.91 earlier during the day, the share bounced off the key technical support level at 1227.27 (S1). The failure to close below the support could increase that levels significance as support going forward. AutoZone ran into sellers again today around 1251.26 for the third trading day in a row after having found sellers at 1251.31 in the prior session and at 1251.81 two days ago.
The trend is clearly bullish, showing an intact uptrend in the short, medium and long-term.
Buying might speed up should prices move above the nearby swing high at 1251.81 where further buy stops could get activated. Selling might accelerate should prices move below the close-by swing low at 1208.55 where further sell stops could get triggered. With prices trading close to this year's high at 1267.93, upside momentum might speed up should AZO be able to break out to new highs for the year. As prices are trading close to September's low at 1193.90, downside momentum could accelerate should the market mark new lows for the month.
Among the 12 market conditions that our pattern recognition engine identified today, the statistics for the Price Action based market condition "Down Close Near Low of Period" stand out. Though it is usually interpreted as bearish, it has actually shown to be bullish for AutoZone. Out of 456 times, AZO closed higher 57.89% 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 1.20%.