BZUN stuck within tight trading range
Baozun Inc. (BZUN) Technical Analysis Report for Feb 14, 2020 | by Techniquant Editorial Team
Moving lower for the 2nd day in a row, BZUN finished the week 3.92% higher at 32.88 after edging lower $0.18 (-0.54%) today on low volume, underperforming the S&P 500 (0.18%) ahead of tomorrow's Presidents' Day market holiday. Closing within the previous day's range, prices failed to decisively move beyond the prior day's trading range in a lackluster session.
Daily Candlestick Chart (BZUN as at Feb 14, 2020):
Friday's trading range has been $0.78 (2.34%), that's far below the last trading month's daily average range of $1.46. Weekly volatility is also lower, being slightly below the market's average weekly trading range. The longer-term, monthly volatility is currently slightly higher than usual for BZUN. Prices continued to consolidate within a tight trading range between 32.02 and 33.71 where it has been caught now for the last three trading days.
During the whole day, prices traded within the previous day's range, unable to trade above the prior day's high or below the previous day's low forming an Inside Bar. Additionally, two candlestick patterns are matching today's price action, the Bearish Short Candle and the Black Candle which are both known as bearish patterns. The last time a Black Candle showed up on February 7th, BZUN lost -1.52% on the following trading day.
Prices are trading close to the key technical support level at 32.02 (S1).
Though the market is experiencing a short-term uptrend, this might just be a correction, as both the medium and long-term trends are still bearish.
Buying could speed up should prices move above the nearby swing high at 33.71 where further buy stops might get triggered. Selling could accelerate should prices move below the close-by swing low at 32.02 where further sell stops might get activated.
Among the five market conditions that our pattern recognition engine identified today, the statistics for the OHLC Patterns based market condition "Bearish Short Candle" stand out. Although it is usually interpreted as bearish, it has actually shown to be bullish for Baozun. Out of 41 times, BZUN closed higher 58.54% 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 53.66% with an average market move of 2.30%.