BZUN breaks back below 50-day moving average
Baozun Inc. (BZUN) Technical Analysis Report for May 22, 2020 | by Techniquant Editorial Team
Moving lower for the 3rd day in a row, BZUN ended the week -1.77% lower at 26.06 after tanking $2.55 (-8.91%) today on high volume, strongly underperforming the S&P 500 (0.24%) ahead of tomorrow's Memorial Day market holiday. This is the biggest single-day loss in over three weeks. Today's close at 26.06 marks the lowest recorded closing price since April 3rd. The bears were in full control today, moving the market lower throughout the whole session. Closing below Thursday's low at 27.90, the stock confirmed its breakout through the prior session low after trading up to $2.16 below it intraday.
Daily Candlestick Chart (BZUN as at May 22, 2020):
Friday's trading range has been $2.85 (10.03%), that's far above the last trading month's daily average range of $1.56. Weekly volatility is also higher, being way above the market's average weekly trading range. The longer-term, monthly volatility is currently slightly higher than usual for BZUN.
One bearish candlestick pattern matches today's price action, the Black Candle.
Prices are trading close to the key technical support level at 25.71 (S1). Baozun closed back below the 50-day moving average at 28.51. When this moving average was crossed below the last time on May 12th, BZUN lost -4.45% on the following trading day. After having been unable to move above 28.73 in the previous session, the market ran into sellers again around the same price level today, missing to move higher than 28.59.
The trend is clearly bearish, showing an intact downtrend in the short, medium and long-term.
Further selling could move prices lower should the market test April's close-by low at 25.38.
Among the 12 market conditions that our pattern recognition engine identified today, the statistics for the Support/Resistance based market condition "Price broke through Technical Support S1" stand out. While it is usually interpreted as bearish, it has actually shown to be bullish for Baozun. Out of 114 times, BZUN closed higher 56.14% 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 60.53% with an average market move of 3.34%.