BRK-B closes below its opening price unable to hold early session gains
Berkshire Hathaway Inc. (BRK-B) Technical Analysis Report for Sep 16, 2020 | by Techniquant Editorial Team
BRK-B finished Wednesday at 219.59 gaining $0.65 (0.3%), outperforming the S&P 500 (-0.46%). Trading $1.98 higher after the open, the market was unable to hold its gains as the bears took control ending the day below its opening price. Closing within the previous day's range, prices failed to decisively move beyond the prior day's trading range.
Daily Candlestick Chart (BRK-B as at Sep 16, 2020):
Wednesday's trading range has been $3.07 (1.39%), that's slightly below the last trading month's daily average range of $3.35. Weekly volatility is also lower, being below the market's average weekly trading range. The longer-term, monthly volatility is currently slightly lower than usual for BRK-B. Prices continued to consolidate within a tight trading range between 216.92 and 222.26 where it has been caught now for the whole last trading week.
Unable to break through the key technical resistance level at 221.62 (R1), the stock closed below it after spiking up to 222.26 earlier during the day. The failure to close above the resistance could increase that levels significance going forward. When prices bounced off a significant resistance level the last time on August 31st, BRK-B actually gained 0.23% on the following trading day.
The trend is clearly bullish, showing an intact uptrend in the short, medium and long-term.
Selling might speed up should prices move below the close-by swing low at 216.92 where further sell stops could get triggered. As prices are trading close to September's high at 223.24, upside momentum might accelerate should Berkshire Hathaway mark new highs for the month. As prices are trading close to September's low at 215.06, downside momentum could speed up should the share mark new lows for the month.
Among the four market conditions that our pattern recognition engine identified today, the statistics for the Price Action based market condition "Close near low of period" stand out. Although it is usually interpreted as bearish, it has actually shown to be bullish for Berkshire Hathaway. Out of 501 times, BRK-B closed higher 58.08% 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 60.68% with an average market move of 0.62%.