CP breaks above 20-day moving average for the first time since February 20th
Canadian Pacific Railway Limited (CP) Technical Analysis Report for Mar 26, 2020 | by Techniquant Editorial Team
Moving higher for the 3rd day in a row, CP ended Thursday at 219.42 gaining $12.60 (6.09%), slightly underperforming the S&P 500 (6.24%). Trading up to $5.58 lower after the open, the stock managed to reverse during the session as bulls took control ending the day above its opening price. The last time this happened on March 19th, CP actually lost -3.88% on the following trading day. Closing within the previous day's range, prices failed to decisively move beyond the prior day's trading range.
Daily Candlestick Chart (CP as at Mar 26, 2020):
Thursday's trading range has been $13.24 (6.24%), that's slightly below the last trading month's daily average range of $14.39. Things look different on the weekly timeframe, where the market's trading range of the last week has been slightly above the market's average weekly trading range. The longer-term, monthly volatility is currently higher than usual for CP.
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, one bullish candlestick pattern matches today's price action, the White Candle.
The share managed to close above the 20-day moving average at 216.33 for the first time since February 20th. Prices are trading close to the key technical resistance level at 223.74 (R1).
Though the market 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 223.74 where further buy stops might get activated.
Among the seven market conditions that our pattern recognition engine identified today, the statistics for the Support/Resistance based market condition "Bullish Break through SMA 20" stand out. Its common bullish interpretation has been confirmed for Canadian Pacific. Out of 163 times, CP closed higher 55.83% 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 60.12% with an average market move of 0.78%.