CMI finds buyers at key support level
Cummins Inc. (CMI) Technical Analysis Report for Jul 31, 2020 | by Techniquant Editorial Team
Moving lower for the 2nd day in a row, CMI finished the month 11.54% higher at 193.26 after losing $1.22 (-0.63%) today, notably underperforming the S&P 500 (0.77%). Closing within the prior day's range, prices missed to decisively move beyond the previous day's trading range.
Daily Candlestick Chart (CMI as at Jul 31, 2020):
Friday's trading range has been $3.89 (2.01%), that's slightly below the last trading month's daily average range of $4.30. Things look different on the weekly timeframe, where the market's trading range of the last week has been above the market's average weekly trading range. The longer-term, monthly volatility is currently higher than usual for CMI.
Two candlestick patterns are matching today's price action, the Bearish Spinning Top and the Hanging Man which are both known as bearish patterns. The last time a Hanging Man showed up on Wednesday, CMI lost -2.21% on the following trading day.
After trading down to 189.93 earlier during the day, the share bounced off the key technical support level at 192.31 (S1). The failure to close below the support might increase that levels significance as support going forward.
The trend is clearly bullish, showing an intact uptrend in the short, medium and long-term.
Among the five market conditions that our pattern recognition engine identified today, the statistics for the Support/Resistance based market condition "Bounced off Technical Support S1" stand out. Its common bullish interpretation has been confirmed for Cummins. Out of 443 times, CMI closed higher 56.88% 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 52.37% with an average market move of 0.49%.