BAC breaks back below 20-day moving average
Bank of America Corporation (BAC) Technical Analysis Report for May 22, 2020 | by Techniquant Editorial Team
Moving lower for the 2nd day in a row, BAC ended the week 5.69% higher at 22.66 after edging lower $0.24 (-1.05%) today, significantly underperforming the S&P 500 (0.24%) ahead of tomorrow's Memorial Day market holiday. Closing below Thursday's low at 22.78, the stock confirmed its breakout through the prior session low after trading up to $0.32 below it intraday.
Daily Candlestick Chart (BAC as at May 22, 2020):
Friday's trading range has been $0.49 (2.14%), that's below the last trading month's daily average range of $0.76. 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 BAC.
Even with a strong opening Bank of closed below the previous day's open and close, forming a bearish Engulfing Candle. Additionally, two candlestick patterns are matching today's price action, the Bearish Short Candle and the Black Candle which are both known as bearish patterns.
Prices are trading close to the key technical support level at 22.43 (S1). The share closed back below the 20-day moving average at 22.79. When this moving average was crossed below the last time on Tuesday, BAC actually gained 3.15% on the following trading day.
The market shows weakness in the short-term (in accordance with its long-term downtrend) with only the medium-term trend still being bullish.
Buying could speed up should prices move above the close-by swing high at 23.27 where further buy stops might get triggered. As prices are trading close to May's high at 23.62, upside momentum could accelerate should BAC mark new highs for the month.
Among the seven market conditions that our pattern recognition engine identified today, the statistics for the OHLC Patterns based market condition "Black Candle" stand out. While it is usually interpreted as bearish, it has actually shown to be bullish for Bank of. Out of 586 times, BAC closed higher 53.41% 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 52.90% with an average market move of 0.32%.