BHF breaks below key technical support level

Overview

BHF finished Monday at 38.06 losing $0.28 (-0.73%), underperforming the S&P 500 (0.02%). Closing within the previous day's range, prices missed to decisively move beyond the prior day's trading range.

Daily Candlestick Chart (BHF as at Jul 15, 2019):

Monday's trading range has been $0.84 (2.18%), that's slightly below the last trading month's daily average range of $1.10. 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 BHF. Prices continued to consolidate within a tight trading range between 37.39 and 38.52 where it has been caught now for the last three trading days.

In a volatile session, prices traded above the previous day's high as well as below the prior day's low, forming a bearish Outside Bar. The last time this happened on June 17th, BHF actually gained 1.57% on the following trading day. Additionally, one bearish candlestick pattern matches today's price action, the Black Candle.

Prices broke below the key technical support level at 38.22 (now R1), which is likely to act as resistance going forward. After having been unable to move lower than 37.76 in the previous session, the stock found buyers again around the same price level today at 37.68.

Though the market is experiencing a short-term uptrend, this could just be a correction, as both the medium and long-term trends are still bearish.

Further buying might move prices higher should the market test June's nearby high at 39.56.

Among the five market conditions that our pattern recognition engine identified today, the statistics for the OHLC Patterns based market condition "Black Candle" stand out. Its common bearish interpretation has been confirmed for Brighthouse Financial. Out of 100 times, BHF closed lower 53.00% of the time on the next trading day after the market condition occurred. The optimal exit for swing trading this condition on the short side has been after three trading days, showing a win rate of 57.00% with an average market move of -2.40%.