BRK-B closes within prior day's range
Berkshire Hathaway Inc. (BRK-B) Technical Analysis Report for Oct 12, 2018 | by Techniquant Editorial Team
BRK-B ended the week -5.77% lower at 206.80 after gaining $1.61 (0.78%) today, underperforming the S&P 500 (1.42%). Closing within the prior day's range, prices failed to decisively move beyond the previous day's trading range.
Daily Candlestick Chart (BRK-B as at Oct 12, 2018):
Friday's trading range has been $6.61 (3.15%), that's far above the last trading month's daily average range of $3.31. Weekly volatility is also higher, being way above the market's average weekly trading range. The longer-term, monthly volatility is currently notably higher than usual for BRK-B.
During the whole day, prices traded within the prior day's range, unable to trade above the previous day's high or below the prior day's low forming an Inside Bar.
Prices are trading close to the key technical resistance level at 209.94 (R1). After having been unable to move lower than 203.28 in the previous session, the share found buyers again around the same price level today at 203.99. The last time this happened on Monday, BRK-B gained 0.77% on the following trading day.
With another close below the lower Bollinger Band, prices are confirming their strong downward momentum in the short-term. A rally back into the Bollinger Band on the next trading day though could signal a potential change in momentum that might lead to a correction back up towards the center of the Bollinger Bands at 216.83.
Although the stock is currently in a short-term downtrend, this could just be a correction, as both the medium and long-term trends are still bullish.
Among the four market conditions that our pattern recognition engine identified today, the statistics for the Technical Indicators based market condition "Close below the lower Bollinger Band" stand out. While it is usually interpreted as bearish, it has actually shown to be bullish for Berkshire Hathaway. Out of 119 times, BRK-B closed higher 64.71% 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 64.71% with an average market move of 1.54%.