CAT unable to break through key resistance level
Caterpillar Inc. (CAT) Technical Analysis Report for Apr 02, 2020 | by Techniquant Editorial Team
CAT ended Thursday at 116.74 gaining $5.39 (4.84%), significantly outperforming the Dow Indu. (2.24%). Today's close at 116.74 marks the highest recorded closing price since March 6th. The bulls were in full control today, moving the market higher throughout the whole session. Closing within the previous day's range, prices missed to decisively move beyond the prior day's trading range.
Daily Candlestick Chart (CAT as at Apr 02, 2020):
Thursday's trading range has been $7.39 (6.64%), that's slightly below the last trading month's daily average range of $8.04. Weekly volatility is also lower, being below the market's average weekly trading range. The longer-term, monthly volatility is currently lower than usual for CAT. Prices continued to consolidate within a tight trading range between 109.50 and 118.52 where it has been caught now for the last three trading days.
Two candlestick patterns are matching today's price action, the White Candle which is known as bullish pattern and one bearish pattern, the Last Engulfing Top Pattern.
Unable to break through the key technical resistance level at 116.91 (R1), the market closed below it after spiking up to 118.52 earlier during the day. The failure to close above the resistance might increase that levels significance going forward. When prices bounced off a significant resistance level the last time on March 19th, CAT lost -7.29% on the following trading day.
Although the share is experiencing a short-term uptrend, this could just be a correction, as both the medium and long-term trends are still bearish.
Among the four market conditions that our pattern recognition engine identified today, the statistics for the OHLC Patterns based market condition "Last Engulfing Top Pattern" stand out. Though it is usually interpreted as bearish, it has actually shown to be bullish for Caterpillar. Out of 50 times, CAT closed higher 56.00% 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 64.00% with an average market move of 0.26%.