CHGG finds buyers at key support level
Chegg Inc. (CHGG) Technical Analysis Report for Feb 14, 2020 | by Techniquant Editorial Team
CHGG ended the week -6.16% lower at 40.08 after gaining $0.18 (0.45%) today, slightly outperforming the S&P 500 (0.18%) ahead of tomorrow's Presidents' Day market holiday. Trading up to $0.33 lower after the open, the share 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 (CHGG as at Feb 14, 2020):
Friday's trading range has been $0.70 (1.75%), that's below the last trading month's daily average range of $1.23. Things look different on the weekly timeframe, where the market's trading range of the last week has been way above the market's average weekly trading range. The longer-term, monthly volatility is currently slightly higher than usual for CHGG.
Two candlestick patterns are matching today's price action, the Bullish Spinning Top which is known as bullish pattern and one bearish pattern, the Bearish Hikkake Pattern.
After trading down to 39.63 earlier during the day, Chegg bounced off the key technical support level at 39.73 (S1). The failure to close below the support might increase that levels importance as support going forward. After having been unable to move lower than 39.40 in the prior session, the stock found buyers again around the same price level today at 39.63. The last time this happened on February 7th, CHGG gained 4.45% on the following trading day.
Crossing above the lower Bollinger Band, prices have lost at least some of their downward momentum in the short-term and could now be heading back up towards the mean of the Bollinger Bands at 42.09.
Although the market 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 close-by swing low at 39.03 where further sell stops might get triggered. With prices trading close to this year's low at 37.81, downside momentum could accelerate should CHGG break out to new lows for the year.
Among the eight market conditions that our pattern recognition engine identified today, the statistics for the Technical Indicators based market condition "Close crossed above the lower Bollinger Band" stand out. Its common bullish interpretation has been confirmed for Chegg. Out of 37 times, CHGG closed higher 64.86% 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 54.05% with an average market move of 1.84%.