CVS closes within previous day's range after lackluster session
CVS Health Corporation (CVS) Technical Analysis Report for May 22, 2020 | by Techniquant Editorial Team
CVS ended the week 0.22% higher at 63.33 after edging lower $0.01 (-0.02%) today on low volume, slightly underperforming the S&P 500 (0.24%) ahead of tomorrow's Memorial Day market holiday. 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 (CVS as at May 22, 2020):
Friday's trading range has been $0.60 (0.95%), that's far below the last trading month's daily average range of $1.53. 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 CVS. Prices continued to consolidate within a tight trading range between 62.73 and 64.33 where it has been caught now for the last three trading days.
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 bearish candlestick pattern matches today's price action, the Hanging Man. The last time a Hanging Man showed up on April 15th, CVS actually gained 3.30% on the following trading day.
Prices are trading close to the key technical support level at 62.87 (S1). After having been unable to move lower than 62.73 in the prior session, CVS Health found buyers again around the same price level today at 62.89.
Though still in a long-term downtrend, the short and medium-term trends both turned bullish already.
Buying could accelerate should prices move above the nearby swing high at 64.33 where further buy stops might get activated. Selling could speed up should prices move below the close-by swing low at 62.73 where further sell stops might get triggered. Further buying could move prices higher should the market test April's nearby high at 65.00.
Among the four market conditions that our pattern recognition engine identified today, the statistics for the OHLC Patterns based market condition "Hanging Man" stand out. While it is usually interpreted as bearish, it has actually shown to be bullish for CVS Health. Out of 59 times, CVS closed higher 54.24% 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 67.80% with an average market move of 1.21%.