CDNS unable to break through key resistance level
Cadence Design Systems Inc. (CDNS) Technical Analysis Report for Sep 16, 2020 | by Techniquant Editorial Team
CDNS finished Wednesday at 102.55 losing $2.68 (-2.55%) on low volume, underperforming the Nasdaq 100 (-1.67%). The bears were in full control today, moving the market lower throughout the whole session. Closing below Tuesday's low at 104.44, the share confirmed its breakout through the prior session low after trading up to $2.00 below it intraday.
Daily Candlestick Chart (CDNS as at Sep 16, 2020):
Wednesday's trading range has been $3.77 (3.56%), that's slightly above the last trading month's daily average range of $3.39. Things look different on the weekly timeframe, where the market's trading range of the last week has been below the market's average weekly trading range. The longer-term, monthly volatility is currently notably higher than usual for CDNS.
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. Additionally, one bearish candlestick pattern matches today's price action, the Black Candle.
Prices are trading close to the key technical support level at 100.63 (S1). Unable to break through the key technical resistance level at 105.89 (R1), Cadence Design closed below it after spiking up to 106.21 earlier during the day. The failure to close above the resistance could increase that levels significance going forward. After having been unable to move above 105.88 in the previous session, the market ran into sellers again around the same price level today, failing to move higher than 106.21. The last time this happened on Monday, CDNS actually gained 1.94% on the following trading day.
While the stock is currently in a short-term downtrend, this might just be a correction, as both the medium and long-term trends are still bullish.
Selling could speed up should prices move below the nearby swing low at 100.27 where further sell stops might get triggered.
Among the nine market conditions that our pattern recognition engine identified today, the statistics for the Support/Resistance based market condition "High close to prior High" stand out. Although it is usually interpreted as bearish, it has actually shown to be bullish for Cadence Design. Out of 599 times, CDNS closed higher 57.43% 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 60.77% with an average market move of 1.31%.