COST closes within prior day's range
Costco Wholesale Corporation (COST) Technical Analysis Report for Sep 16, 2020 | by Techniquant Editorial Team
COST ended Wednesday at 343.73 losing $0.18 (-0.05%), but still strongly outperforming the Nasdaq 100 (-1.67%). Closing within the prior day's range, prices failed to decisively move beyond the previous day's trading range.
Daily Candlestick Chart (COST as at Sep 16, 2020):
Wednesday's trading range has been $5.51 (1.59%), that's slightly below the last trading month's daily average range of $6.45. Weekly volatility is also lower, being slightly below the market's average weekly trading range. The longer-term, monthly volatility is currently slightly higher than usual for COST. Prices continued to consolidate within a tight trading range between 340.47 and 348.76 where it has been caught now for the last three trading days.
Notwithstanding a strong opening the stock closed below the prior day's open and close, forming a bearish Engulfing Candle. Additionally, one bearish candlestick pattern matches today's price action, the Black Candle.
Prices are trading close to the key technical support level at 339.46 (S1). Prices are trading close to the key technical resistance level at 349.06 (R1). After having been unable to move lower than 342.75 in the previous session, the share found buyers again around the same price level today at 343.25. The last time this happened on August 26th, COST gained 0.61% on the following trading day.
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.
Buying could accelerate should prices move above the close-by swing high at 349.70 where further buy 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 "Black Candle" stand out. While it is usually interpreted as bearish, it has actually shown to be bullish for Costco Wholesale. Out of 499 times, COST closed higher 56.31% 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 59.32% with an average market move of 0.91%.