CFX closes within prior day's range after lackluster session
Colfax Corporation (CFX) Technical Analysis Report for May 22, 2020 | by Techniquant Editorial Team
CFX finished the week 3.8% higher at 26.23 after losing $0.52 (-1.94%) today on low volume, significantly underperforming the S&P 500 (0.24%) ahead of tomorrow's Memorial Day market holiday. The bears were in full control today, moving the market lower throughout the whole session. 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 (CFX as at May 22, 2020):
Friday's trading range has been $0.76 (2.84%), that's far below the last trading month's daily average range of $1.40. 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 CFX. Prices continued to consolidate within a tight trading range between 25.58 and 27.18 where it has been caught now for the last three trading days.
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. Regardless of a strong opening Colfax closed below the previous day's open and close, forming a bearish Engulfing Candle. The last time this candlestick pattern showed up on May 12th, CFX lost -6.19% on the following trading day. Additionally, two candlestick patterns are matching today's price action, the Bearish Short Candle and the Black Candle which are both known as bearish patterns.
Prices are trading close to the key technical resistance level at 26.97 (R1). After having been unable to move lower than 25.99 in the prior session, the share found buyers again around the same price level today at 26.00.
The market shows weakness in the short-term (in accordance with its long-term downtrend) with only the medium-term trend still being bullish.
Buying could speed up should prices move above the close-by swing high at 27.18 where further buy stops might get triggered. Selling could accelerate should prices move below the nearby swing low at 25.58 where further sell stops might get activated.
Among the seven market conditions that our pattern recognition engine identified today, the statistics for the OHLC Patterns based market condition "Bearish Short Candle" stand out. Although it is usually interpreted as bearish, it has actually shown to be bullish for Colfax. Out of 73 times, CFX closed higher 57.53% 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 58.90% with an average market move of 2.70%.