BWA enters Golden Cross for the first time since February 26th
BorgWarner Inc. (BWA) Technical Analysis Report for Jul 31, 2020 | by Techniquant Editorial Team
Moving lower for the 2nd day in a row, BWA ended the month 3.68% higher at 36.60 after losing $0.51 (-1.37%) today on high volume, significantly underperforming the S&P 500 (0.77%).
Daily Candlestick Chart (BWA as at Jul 31, 2020):
Friday's trading range has been $1.13 (3.05%), that's slightly above the last trading month's daily average range of $1.01. Weekly volatility is also higher, being slightly above the market's average weekly trading range. The longer-term, monthly volatility is currently slightly higher than usual for BWA.
After trading down to 36.06 earlier during the day, the stock bounced off the key technical support level at 36.15 (S1). The failure to close below the support might increase that levels significance as support going forward. BorgWarner closed below the 20-day moving average at 37.03 for the first time since July 1st. When this moving average was crossed below the last time on July 1st, BWA actually gained 2.77% on the following trading day.
Although the market is currently in a short-term downtrend, this could just be a correction, as both the medium and long-term trends are still bullish. With its 50-day moving average crossing above its 200-day moving average, the share has entered a so-called "Golden Cross" for the first time since February 26th. Showing increasing upward momentum in the short and medium-term the "Golden Cross" is known to indicate a potential bull market on the horizon.
Among the four market conditions that our pattern recognition engine identified today, the statistics for the Support/Resistance based market condition "Bounced off Technical Support S1" stand out. Its common bullish interpretation has been confirmed for BorgWarner. Out of 393 times, BWA closed higher 60.81% 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 52.93% with an average market move of 0.98%.