BWA breaks below 50-day moving average for the first time since April 23rd
BorgWarner Inc. (BWA) Technical Analysis Report for Sep 16, 2020 | by Techniquant Editorial Team
Moving lower for the 2nd day in a row, BWA ended Wednesday at 39.56 tanking $2.71 (-6.41%) on high volume, strongly underperforming the S&P 500 (-0.46%). This is the biggest single-day loss in over three months. Today's close at 39.56 marks the lowest recorded closing price since August 7th. 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 (BWA as at Sep 16, 2020):
Wednesday's trading range has been $2.61 (6.21%), that's far above the last trading month's daily average range of $1.15. Weekly volatility is also higher, being way above the market's average weekly trading range. The longer-term, monthly volatility is currently slightly lower than usual for BWA.
One bearish candlestick pattern matches today's price action, the Black Candle.
The market closed below the 50-day moving average at 39.60 for the first time since April 23rd.
Crossing below the lower Bollinger Band for the first time since March 18th, prices have shown unusually strong downward momentum in the short-term. This might either indicate a potential selling climax after which prices could head back up towards the mean of the Bollinger Bands at 41.52 or signal the beginning of a strong momentum breakout leading to even lower prices. The last time prices broke out below the lower Bollinger Band on March 18th, BWA actually gained 6.49% on the following trading day.
Though the stock is currently in a short-term downtrend, this might just be a correction, as both the medium and long-term trends are still bullish.
Among the 14 market conditions that our pattern recognition engine identified today, the statistics for the Support/Resistance based market condition "Bearish Break through SMA 50" stand out. Its common bearish interpretation has been confirmed for BorgWarner. Out of 87 times, BWA closed lower 52.87% of the time on the next trading day after the market condition occurred.