CAKE finds buyers again around 19.49
The Cheesecake Factory Incorporated (CAKE) Technical Analysis Report for May 22, 2020 | by Techniquant Editorial Team
CAKE ended the week 7.83% higher at 19.97 after edging higher $0.01 (0.05%) today on low volume, slightly underperforming the S&P 500 (0.24%) ahead of tomorrow's Memorial Day market holiday. Closing within the previous day's range, prices missed to decisively move beyond the prior day's trading range in a lackluster session.
Daily Candlestick Chart (CAKE as at May 22, 2020):
Friday's trading range has been $0.88 (4.37%), that's far below the last trading month's daily average range of $1.62. Weekly volatility is also lower, being below the market's average weekly trading range. The longer-term, monthly volatility is currently slightly lower than usual for CAKE. Prices continued to consolidate within a tight trading range between 18.79 and 20.71 where it has been caught now for the whole last trading week.
In a volatile session, prices traded above the previous day's high as well as below the prior day's low, forming a bearish Outside Bar. The last time this happened on May 6th, CAKE actually gained 4.52% on the following trading day. Additionally, one bearish candlestick pattern matches today's price action, the Bearish Spinning Top.
Prices are trading close to the key technical support level at 19.18 (S1). After having been unable to move lower than 19.66 in the previous session, the market found buyers again around the same price level today at 19.49.
The trend is clearly bearish, showing an intact downtrend in the short, medium and long-term.
Buying could speed up should prices move above the nearby swing high at 20.71 where further buy stops might get activated. Selling could accelerate should prices move below the close-by swing low at 18.79 where further sell stops might get triggered. As prices are trading close to May's high at 22.52, upside momentum could speed up should the share mark new highs for the month.
Among the six market conditions that our pattern recognition engine identified today, the statistics for the OHLC Patterns based market condition "Bearish Outside Bar" stand out. Though it is usually interpreted as bearish, it has actually shown to be bullish for The Cheesecake. Out of 138 times, CAKE closed higher 57.97% 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 five trading days, showing a win rate of 55.07% with an average market move of -0.02%.