BBD dominated by bears dragging the market lower throughout the day
Banco Bradesco Sa American Depositary Shares (BBD) Technical Analysis Report for Jan 21, 2020 | by Techniquant Editorial Team
BBD finished Tuesday at 7.92 tanking $0.52 (-6.16%) on high volume, significantly underperforming the S&P 500 (-0.27%). This is the biggest single-day loss in over six months. Today's close at 7.92 marks the lowest recorded closing price since November 29, 2019. The bears were in full control today, moving the market lower throughout the whole session. Ending with a weak close near the low of the day sets a bearish note for the next session.
Daily Candlestick Chart (BBD as at Jan 21, 2020):
Tuesday's trading range has been $0.29 (3.55%), that's far above the last trading month's daily average range of $0.16. Weekly volatility is also higher, being slightly above the market's average weekly trading range. The longer-term, monthly volatility is currently higher than usual for BBD.
Two candlestick patterns are matching today's price action, the Bearish Closing Marubozu and the Black Candle which are both known as bearish patterns. The last time a Bearish Closing Marubozu showed up on October 24, 2018, BBD actually gained 4.16% on the following trading day.
Banco Bradesco closed back below the 100-day moving average at 8.32.
Crossing below the lower Bollinger Band for the first time since January 15th, prices have shown unusually strong downward momentum in the short-term. This could either indicate a potential selling climax after which prices might head back up towards the mean of the Bollinger Bands at 8.66 or signal the beginning of a strong momentum breakout leading to even lower prices.
Though still in a long-term uptrend, the short and medium-term trends both turned bearish already.
2019's low at 7.54 is within reach and we could see further downside momentum should the share break out beyond. Further selling might move prices lower should the market test December's close-by low at 7.91.
Among the 15 market conditions that our pattern recognition engine identified today, the statistics for the Technical Indicators based market condition "Close crossed below the lower Bollinger Band" stand out. While it is usually interpreted as bearish, it has actually shown to be bullish for Banco Bradesco. Out of 71 times, BBD closed higher 63.38% 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 57.75% with an average market move of 1.53%.