CAKE closes below its opening price unable to hold early session gains
The Cheesecake Factory Incorporated (CAKE) Technical Analysis Report for Mar 25, 2020 | by Techniquant Editorial Team
CAKE finished Wednesday at 18.87 losing $0.35 (-1.82%) on high volume, notably underperforming the S&P 500 (1.15%). Trading $1.71 higher after the open, the share was unable to hold its gains as the bears took control ending the day below its opening price. The last time this happened on Monday, CAKE actually gained 22.34% on the following trading day. Closing within the prior day's range, prices failed to decisively move beyond the previous day's trading range.
Daily Candlestick Chart (CAKE as at Mar 25, 2020):
Wednesday's trading range has been $4.29 (21.05%), that's above the last trading month's daily average range of $3.54. Things look different on the weekly timeframe, where the market's trading range of the last week has been slightly below the market's average weekly trading range. The longer-term, monthly volatility is currently higher than usual for CAKE.
Prices are trading close to the key technical resistance level at 19.50 (R1). After having been unable to move lower than 17.50 in the prior session, the stock found buyers again around the same price level today at 17.80.
The trend is clearly bearish, showing an intact downtrend in the short, medium and long-term.
Among the two market conditions that our pattern recognition engine identified today, the statistics for the Price Action based market condition "Bearish Intraday Reversal" stand out. Though it is usually interpreted as bearish, it has actually shown to be bullish for The Cheesecake. Out of 458 times, CAKE closed higher 54.37% 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 54.59% with an average market move of 0.35%.