COST breaks back above 200-day moving average
Costco Wholesale Corporation (COST) Technical Analysis Report for Mar 26, 2020 | by Techniquant Editorial Team
COST finished Thursday at 292.30 gaining $11.44 (4.07%), strongly underperforming the Nasdaq 100 (5.72%). The bulls were in full control today, moving the market higher throughout the whole session. Closing above Wednesday's high at 290.72, the market confirmed its breakout through the previous session high after trading up to $3.01 above it intraday.
Daily Candlestick Chart (COST as at Mar 26, 2020):
Thursday's trading range has been $12.87 (4.57%), that's below the last trading month's daily average range of $16.56. 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 COST. Prices continued to consolidate within a tight trading range between 279.21 and 297.35 where it has been caught now for the last three trading days.
Two candlestick patterns are matching today's price action, the Bullish Short Candle and the White Candle which are both known as bullish patterns.
The share managed to close back above the 200-day moving average at 292.04 for the first time since March 19th. Prices are trading close to the key technical resistance level at 295.31 (R1). After having been unable to move lower than 279.21 in the prior session, Costco Wholesale found buyers again around the same price level today at 280.86. The last time this happened on March 16th, COST gained 8.41% on the following trading day.
Although the stock is experiencing a short-term uptrend, this might just be a correction, as both the medium and long-term trends are still bearish.
Buying could speed up should prices move above the nearby swing high at 297.35 where further buy stops might get triggered. Selling could accelerate should prices move below the close-by swing low at 279.21 where further sell stops might get activated. With prices trading close to this year's low at 271.28, downside momentum could speed up should COST break out to new lows for the year. As prices are trading close to March's low at 276.34, downside momentum might accelerate should the market mark new lows for the month.
Among the 11 market conditions that our pattern recognition engine identified today, the statistics for the OHLC Patterns based market condition "Bullish Short Candle" stand out. Its common bullish interpretation has been confirmed for Costco Wholesale. Out of 83 times, COST closed higher 57.83% 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 68.67% with an average market move of 1.18%.