CARG finds buyers around 24.33 for the third day in a row
CarGurus Inc. (CARG) Technical Analysis Report for Jul 24, 2020 | by Techniquant Editorial Team
Moving higher for the 3rd day in a row, CARG ended the week 3.28% higher at 25.18 after edging higher $0.11 (0.44%) today, notably outperforming the S&P 500 (-0.62%). Trading up to $0.58 lower after the open, the stock managed to reverse during the session as bulls took control ending the day above its opening price. Closing within the prior day's range, prices missed to decisively move beyond the previous day's trading range in a lackluster session.
Daily Candlestick Chart (CARG as at Jul 24, 2020):
Friday's trading range has been $0.94 (3.77%), that's below the last trading month's daily average range of $1.21. Weekly volatility is also lower, being way below the market's average weekly trading range. The longer-term, monthly volatility is currently slightly lower than usual for CARG. Prices continued to consolidate within a tight trading range between 23.93 and 25.36 where it has been caught now for the whole last trading week.
During the whole day, prices traded within the prior day's range, unable to trade above the previous day's high or below the prior day's low forming an Inside Bar.
Unable to break through the key technical resistance level at 25.26 (R1), the share closed below it after spiking up to 25.27 earlier during the day. The failure to close above the resistance could increase that levels importance going forward. The market found buyers again today around 24.33 for the third trading day in a row after having found demand at 24.16 in the previous session and at 24.19 two days ago.
Though CarGurus is currently in a short-term downtrend, this might just be a correction, as both the medium and long-term trends are still bullish.
Buying could accelerate should prices move above the nearby swing high at 25.36 where further buy stops might get triggered. Selling could speed up should prices move below the close-by swing low at 24.16 where further sell stops might get activated.
Among the 10 market conditions that our pattern recognition engine identified today, the statistics for the Support/Resistance based market condition "Bounced off Technical Resistance R1" stand out. Its common bearish interpretation has been confirmed for CarGurus. Out of 121 times, CARG closed lower 56.20% of the time on the next trading day after the market condition occurred. The optimal exit for swing trading this condition on the short side has been after 10 trading days, showing a win rate of 52.07% with an average market move of -0.76%.