CAT closes above its opening price after recovering from early selling pressure
Caterpillar Inc. (CAT) Technical Analysis Report for Sep 16, 2020 | by Techniquant Editorial Team
CAT ended Wednesday at 151.11 gaining $2.51 (1.69%), notably outperforming the Dow Indu. (0.13%). Trading up to $1.63 lower after the open, the share managed to reverse during the session as bulls took control ending the day above its opening price. The last time this happened on August 7th, CAT gained 5.26% 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 (CAT as at Sep 16, 2020):
Wednesday's trading range has been $3.61 (2.41%), that's slightly below the last trading month's daily average range of $3.80. Weekly volatility is also lower, being slightly below the market's average weekly trading range. The longer-term, monthly volatility is currently slightly higher than usual for CAT.
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. After moving lower in the previous session, Caterpillar managed to close higher but below the prior day's open, forming a bullish Harami Candle.
Unable to break through the key technical resistance level at 151.20 (R1), the stock closed below it after spiking up to 151.98 earlier during the day. The failure to close above the resistance could increase that levels significance going forward. After having been unable to move lower than 148.36 in the previous session, the market found buyers again around the same price level today at 148.37.
The trend is clearly bullish, showing an intact uptrend in the short, medium and long-term.
Buying might accelerate should prices move above the close-by swing high at 154.80 where further buy stops could get activated. Selling might speed up should prices move below the nearby swing low at 148.36 where further sell stops could get triggered.
Among the six market conditions that our pattern recognition engine identified today, the statistics for the OHLC Patterns based market condition "Bullish Harami Candle" stand out. Its common bullish interpretation has been confirmed for Caterpillar. Out of 38 times, CAT closed higher 63.16% 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 52.63% with an average market move of 0.28%.