CAH finds buyers at key support level
Cardinal Health Inc. (CAH) Technical Analysis Report for Jul 31, 2020 | by Techniquant Editorial Team
Moving lower for the 2nd day in a row, CAH finished the month 4.66% higher at 54.62 after tanking $1.86 (-3.29%) today on high volume, significantly underperforming the S&P 500 (0.77%). This is the biggest single-day loss in over a month. The bears were in full control today, moving the market lower throughout the whole session. Closing below Thursday's low at 55.60, Cardinal Health confirmed its breakout through the prior session low after trading up to $1.69 below it intraday.
Daily Candlestick Chart (CAH as at Jul 31, 2020):
Friday's trading range has been $2.59 (4.59%), that's far above the last trading month's daily average range of $1.39. Weekly volatility is also higher, being slightly above the market's average weekly trading range. The longer-term, monthly volatility is currently higher than usual for CAH.
One bearish candlestick pattern matches today's price action, the Black Candle.
After trading down to 53.91 earlier during the day, the stock bounced off the key technical support level at 54.33 (S1). The failure to close below the support could increase that levels significance as support going forward. When prices bounced off a significant support level the last time on July 20th, CAH gained 5.34% on the following trading day.
The trend is clearly bullish, showing an intact uptrend in the short, medium and long-term.
Among the seven market conditions that our pattern recognition engine identified today, the statistics for the OHLC Patterns based market condition "Black Candle" stand out. Although it is usually interpreted as bearish, it has actually shown to be bullish for Cardinal Health. Out of 505 times, CAH closed higher 53.86% 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 59.60% with an average market move of 0.85%.