COST finds buyers at key support level
Costco Wholesale Corporation (COST) Technical Analysis Report for Jul 31, 2020 | by Techniquant Editorial Team
COST ended the month 7.36% higher at 325.53 after gaining $0.71 (0.22%) today, strongly underperforming the Nasdaq 100 (1.78%). Trading up to $2.27 lower after the open, the market managed to reverse during the session as bulls took control ending the day above its opening price. Closing within the previous day's range, prices missed to decisively move beyond the prior day's trading range in a lackluster session.
Daily Candlestick Chart (COST as at Jul 31, 2020):
Friday's trading range has been $3.76 (1.16%), that's below the last trading month's daily average range of $4.96. Weekly volatility is also lower, being slightly below the market's average weekly trading range. The longer-term, monthly volatility is currently lower than usual for COST.
During the whole day, prices traded within the previous day's range, unable to trade above the prior day's high or below the previous day's low forming an Inside Bar. Additionally, two candlestick patterns are matching today's price action, the Bullish Spinning Top and the Takuri Line which are both known as bullish patterns. The last time a Takuri Line showed up on June 15th, COST gained 1.41% on the following trading day.
After trading down to 322.55 earlier during the day, the share bounced off the key technical support level at 322.63 (S1). The failure to close below the support could increase that levels significance as support going forward. After having been unable to move lower than 322.00 in the prior session, Costco Wholesale found buyers again around the same price level today at 322.55.
The trend is clearly bullish, showing an intact uptrend in the short, medium and long-term.
Buying might speed up should prices move above the nearby swing high at 330.00 where further buy stops could get activated. Selling might accelerate should prices move below the close-by swing low at 322.00 where further sell stops could get triggered. With prices trading close to this year's high at 331.49, upside momentum might speed up should the stock be able to break out to new highs for the year.
Among the eight market conditions that our pattern recognition engine identified today, the statistics for the OHLC Patterns based market condition "Takuri Line" stand out. Its common bullish interpretation has been confirmed for Costco Wholesale. Out of 47 times, COST closed higher 57.45% 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 61.70% with an average market move of 1.33%.